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New and old market-based instruments for climate change policy


Goers, Sebastian; Wagner, Alexander F; Wegmayr, Jürgen (2010). New and old market-based instruments for climate change policy. Environmental Economics and Policy Studies, 12(1/2):1-30.

Abstract

We review and examine three market-based instruments to address the challenge of climate change: emission trading, emission taxes, and hybrid instruments. Our main contribution is the illustration and comparison of these instruments using recent results from theoretical research and practical policy experience. Hybrid policies that aim to combine taxes and permits emerge as a promising way forward. An additional contribution is that we also comment on two other related concepts, namely, innovation strategies and prediction markets. For the former, we show that, to make economic sense, the much publicized Asia-Pacific Partnership on Clean Development and Climate has to rely on the same basic tool as the other instruments, namely, relative prices. For the latter, we discuss how prediction markets can complement traditional scenario analysis by experts. They are likely to improve the practical implementation of all previously discussed methods.

We review and examine three market-based instruments to address the challenge of climate change: emission trading, emission taxes, and hybrid instruments. Our main contribution is the illustration and comparison of these instruments using recent results from theoretical research and practical policy experience. Hybrid policies that aim to combine taxes and permits emerge as a promising way forward. An additional contribution is that we also comment on two other related concepts, namely, innovation strategies and prediction markets. For the former, we show that, to make economic sense, the much publicized Asia-Pacific Partnership on Clean Development and Climate has to rely on the same basic tool as the other instruments, namely, relative prices. For the latter, we discuss how prediction markets can complement traditional scenario analysis by experts. They are likely to improve the practical implementation of all previously discussed methods.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:2010
Deposited On:01 Mar 2011 15:36
Last Modified:05 Apr 2016 14:48
Publisher:Springer
ISSN:1432-847X
Additional Information:The original publication is available at www.springerlink.com
Publisher DOI:https://doi.org/10.1007/s10018-010-0161-x
Related URLs:http://www.bf.uzh.ch/cms/employees/alexander-f..wagner_165_624.html?type=publications&emp_id=11 (Author)
Permanent URL: https://doi.org/10.5167/uzh-46363

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