Emissions trading to combat climate change: The impact of scheme design on transaction costs Report as inadecuate




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This paper explores the likely impact of emissions trading design on transaction costs. Transaction costs includeboth the costs for the private sector to comply with the scheme rules and the costs of scheme administration. Ineconomic theory transaction costs are often assumed to be zero. But transaction costs are real costs and there is noreason for treating them differently to other costs. Thus, in setting up an emissions trading scheme, transaction costshave to be taken into account in order to recommend a cost efficient design. In this paper, we compare transactioncosts of different schemes such as the European Emissions Trading Scheme and the Clean Development Mechanism(CDM) to asses the hypothesis that cap and trade schemes have lower transaction costs than project-basedmechanisms such as the CDM.

Keywords: Climate policy ; emission trading ; transaction costs ; New institutional Economics ; European Emissions TradingScheme ; Clean Development Mechanism

Subject(s): Environmental Economics and Policy

International Relations/Trade

Resource /Energy Economics and Policy

Issue Date: 2006

Publication Type: Conference Paper/ Presentation

PURL Identifier: http://purl.umn.edu/174096

Total Pages: 16

Record appears in: Australian Agricultural and Resource Economics Society (AARES) > 2006 Conference (50th), February 8-10, 2006, Sydney, Australia





Author: Betz, Regina

Source: http://ageconsearch.umn.edu/record/174096?ln=en







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