@article{Martin:2014:10.1257/aer.104.8.2482, author = {Martin, R and Muûls, M and de, Preux LB and Wagner, UJ}, doi = {10.1257/aer.104.8.2482}, journal = {American Economic Review}, pages = {2482--2508}, title = {Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme}, url = {http://dx.doi.org/10.1257/aer.104.8.2482}, volume = {104}, year = {2014} }
TY - JOUR AB - <jats:p>When regulated firms are offered compensation to prevent them from relocating, efficiency requires that payments be distributed across firms so as to equalize marginal relocation probabilities, weighted by the damage caused by relocation. We formalize this fundamental economic logic and apply it to analyzing compensation rules proposed under the EU Emissions Trading Scheme, where emission permits are allocated free of charge to carbon-intensive and trade-exposed industries. We show that this practice results in substantial overcompensation for given carbon leakage risk. Efficient permit allocation reduces the aggregate risk of job loss by more than half without increasing aggregate compensation. (JEL H23, Q52, Q53, Q54, Q58)</jats:p> AU - Martin,R AU - Muûls,M AU - de,Preux LB AU - Wagner,UJ DO - 10.1257/aer.104.8.2482 EP - 2508 PY - 2014/// SN - 0002-8282 SP - 2482 TI - Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme T2 - American Economic Review UR - http://dx.doi.org/10.1257/aer.104.8.2482 VL - 104 ER -
Transition to Zero Pollution is a flagship initiative of the Imperial's Academic Strategy, with a vision to realise a sustainable zero pollution future. The initiative brings researchers from different disciplines together to take a systems approach to tackling pollution in all its forms.