Description:
As governments begin to consider regulation of greenhouse gases, many are turning to market-based initiatives. Such programs assign emitters a certain share of emissions, and allow them to trade for emissions rights in a market. Emission shares can be distributed strictly as a certain amount of carbon, or they can be assigned as a certain amount of pollutant per unit output or input. This paper compares the two methods of regulation in the specific area of regulating greenhouse gases, and provides a theoretical economic analysis of their effects.
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