【Brownbag】Cap-and-Trade System, Firm Selection, and Emission Efficiency

  • 研討會日期 : 2023-10-27
  • 時間 : 12:10
  • 主講人 : Professor Yi-Fan Chen (陳奕帆)
  • 地點 : Conference Room B110
  • 演講者簡介 : Professor Yi-Fan Chen received his PhD in Economics from National Taiwan University. He is currently an Assistant Professor at the National University of Kaohsiung. His research interests are international trade, industrial organization, and applied game theory.
  • 演講摘要 : We inspect the implications of cap-and-trade system on industrial productivity and emission efficiency in an environment where firms are heterogeneous in their productivities. We show that a cap-and-trade system with free firm-level allowances necessarily entails a lenient firm selection than an unregulated economy. The main reasons are that free allowances works as a subsidy that reduces the barrier for firms to remain operative, and that the cap on pollution emission reallocates workers from the material sector to the manufacturing sector to an extent that goes beyond the competitive equilibrium scale. A cap-and-trade system can thus entail a higher emission intensity at economic level than without environmental regulation. We calibrate the model to be consistent with the EU Emission Trading System and inspect the effect of the phasing out of free allowances. Our simulation shows that phasing out free allowances partially amends for the lenient firm selection, thereby improving emission efficiency to a large extent.
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