caa a22 4500 445854774 CHVBK 20180317145424.0 cr unu---uuuuu 170323e20110601xx s 000 0 eng 10.1007/s10640-010-9432-z doi (NATIONALLICENCE)springer-10.1007/s10640-010-9432-z Emissions Trading with Updated Allocation: Effects on Entry/Exit and Distribution [Elektronische Daten] [Knut Rosendahl, Halvor Storrøsten] Allocation of emissions allowances may have significant distributional and efficiency effects. It is well known that cost-efficiency may be achieved if allowances are auctioned or distributed in a lump sum manner, e.g., based on emissions levels before the start of the system (‘grandfathering'). Böhringer and Lange (Eur Econ Rev 49:2041-2055, 2005) show that a cost-effective outcome can also be achieved if the base year for allocation is continually updated (‘updating'), given that banking and borrowing are prohibited. In this paper we examine whether updating alters the entry and exit conditions for firms compared to grandfathering, and how it affects profits for new and existing firms. We find that the two schemes function surprisingly similar: First, the incentives to entry and exit are identical. Second, the total value of free quotas to existing firms, based on emissions before the system starts, is also identical without any auctioning. With updating initial claims for free allowances have a shorter lifetime compared to grandfathering, but quota prices are higher as firms anticipate the effect of current emissions on future claims to free allowances. The two effects exactly cancel each other out. If there is some combination of auction and free allocation, the total value of free quotas will always be highest under grandfathering if the auction rate is the same. Entry and exit incentives are still equal. Springer Science+Business Media B.V., 2010 Emissions trading nationallicence Allocation of quotas nationallicence Quota prices nationallicence Rosendahl Knut Research Department, Statistics Norway, P.O. Box 8131 Dep., 0033, Oslo, Norway aut Storrøsten Halvor Research Department, Statistics Norway, P.O. Box 8131 Dep., 0033, Oslo, Norway aut Environmental and Resource Economics Springer Netherlands 49/2(2011-06-01), 243-261 0924-6460 49:2<243 2011 49 10640 https://doi.org/10.1007/s10640-010-9432-z text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.1007/s10640-010-9432-z text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Rosendahl Knut Research Department, Statistics Norway, P.O. Box 8131 Dep., 0033, Oslo, Norway aut NATIONALLICENCE 700 1- Storrøsten Halvor Research Department, Statistics Norway, P.O. Box 8131 Dep., 0033, Oslo, Norway aut NATIONALLICENCE 773 0- Environmental and Resource Economics Springer Netherlands 49/2(2011-06-01), 243-261 0924-6460 49:2<243 2011 49 10640 Metadata rights reserved Springer special CC-BY-NC licence nationallicence BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-springer