Optimal Opt-In Climate Contracts
Journal of Applied Economics, Vol. 1, pp. 363-384, 1998
Posted: 18 May 2004
The paper studies the design of a treadable permit system with opt-in possibilities for LDCs countries in the context of climate change. In setting the optimal opt-in rule, the regulator faces a trade-off between production efficiency (minimization of control costs) and information rent extraction (reduction of excess permits). Results from simulation exercises based on data from MIT's EPPA Model are also provided.
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