search query: @journal_id 1383 / total: 419
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Author: | Goulder, L.H. Hafstead, M.A.C. Dworsky, M. |
Title: | Impacts of alternative emissions allowance allocation methods under a federal cap-and-trade program |
Journal: | Journal of Environmental Economics and Management
2010 : NOV, VOL. 60:3, p. 161-181 |
Index terms: | air pollution USA econometrics income tax allowances gross national product |
Language: | eng |
Abstract: | This article examines the consequences of alternative allowance allocation designs for industry profits and GDP under a federal cap-and-trade program to diminish greenhouse gas emissions. A general equilibrium model of the U.S. economy is applied with a unique treatment of capital dynamics, permitting close attention to profit effects. Effects on profits critically rely on the relative dependence on auctioning allowances vs. allocating them freely. Freely allocating less than 15% of the allowances generally is enough to prevent profit losses in the most susceptible U.S. industries. Allocating all allowances freely substantially overcompensates these industries. If allowances are auctioned and the proceeds employed to finance the cutting of income tax rates, GDP costs are about 33% lower than in the case of free allocation. The results are robust to policies varying in stringency, offset availability, and the possibility of intertermporal allowance trade. |
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