Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229898
Authors: 
Zaklan, Aleksandar
Year of Publication: 
2021
Series/Report no.: 
DIW Discussion Papers No. 1925
Abstract: 
This paper tests the independence property under the Coase Theorem in a large multinational cap-and-trade scheme for greenhouse gas emissions, the EU Emissions Trading System (EU ETS). I analyze whether emissions of power producers regulated under the EU ETS are independent from allowance allocations, leveraging a change in allocation policy for a difference-in-differences strategy. The evidence suggests that the independence property holds overall and for larger emitters. It fails for small emitters, indicating that transaction costs distort their emission decisions. However, due to their small share of aggregate emissions the independence property remains intact at the sector level.
Subjects: 
Coase theorem
independence property
cap-and-trade
EU ETS
greenhouse gas emissions
JEL: 
Q54
Q58
Q52
L94
Document Type: 
Working Paper

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