The Nature of Property Rights of Emissions Allowances in Mitigating the Effects of Transaction Costs

• Main Authors: Hsing-Pei Chen, 陳星貝
• Other Authors: 簡資修
• Format: Others
• Language: en_US
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/07322885734838416253

碩士 === 國立臺灣大學 === 法律學研究所 === 102 === Emission allowances of cap-and-trade programs may be characterized in the economic sense as property rights tradable by owners on the market. When the state decides to reduce emissions, implementing a cap-and-trade program would be economically efficient so long as regulated entities can easily buy and sell allowances. To achieve this outcome, the design of a tradable permits program should incorporate well-defined property rights and low transaction costs to facilitate trades on the market. The purpose of this thesis is to examine the characteristics that cap-and-trade programs should embody to satisfy these conditions and for the resulting emissions reductions to be economically efficient. Trade rules, trade ratios, banking, borrowing, allowance reserves, price floors and ceilings, and volatility in allowance prices all play a role in defining the nature of property rights of allowances, which influences transaction costs associated with complying with cap-and-trade programs. The United States was the first nation to introduce a tradable permits program for pollution control beginning in 1974, and many programs have been implemented since then by other nations and regions to address the issue of climate change. The current status of global climate change policy is trending towards individual regions adopting their own cap-and-trade programs and then linking them with programs from other regions. Linking has implications on economic efficiency as it broadens the market for allowances, thereby decreasing transaction costs as market liquidity is increased.