Abstract:Emissions taxes impose a fixed price on emissions, whereas under tradable permit schemes prices emerge in the secondary permit market. The delayed price discovery under tradable permits creates uncertainty about the future cost of compliance that liable emitters face. To mitigate this uncertainty, some jurisdictions have designed policies to regulate GHG with an emissions tax that is in force for several years, subsequently transforming into a tradable permit scheme. This paper examines the effects that this s… Show more
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