Prices versus quantities in a vintage capital model
(2009) , 21 pages
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- Authors
- Abstract
- The heterogeneity of the available physical capital with respect to productivity and emission intensity is an important factor for policy design, especially in the presence of emission restrictions. In a vintage capital model, reducing pollution requires to change the capital structure through investment in cleaner machines and to scrap the more polluting ones. In such a setting we show that emission tax and auctioned emission permits may yield contrasting outcomes. We also show that some failures in the permits market may undermine its efficiency and that imposing the emission cap over longer periods plays a regularizing role in the market.
- Affiliations
Bulgarian Academy of Sciences Institute of Mathematics and Informatics Vienna Institute of Technology Institute of Mathematics Methods in Economics
Citations
Bréchet, T., Tsachev, T., & Veliov, V. M. (2009). Prices versus quantities in a vintage capital model (Core Discussion Papers 2009/15). https://hdl.handle.net/2078.5/249412