Investment Incentives in Tradable Emissions Markets with Price Floors
研究排放交易市场中价格下限如何影响企业投资减排技术，理论模型和实验均表明价格下限能显著提升投资，且排放许可价格对投资和冲击的反应仅在无价格下限时存在。
Concerns about cost containment and price volatility have led regulators to include price controls in many cap-and-trade markets. We study how these controls affect firms’ incentives to invest in the adoption of abatement technologies in a model with abatement cost uncertainty. Price floors increase investment incentives because they raise the expected benefits from lowering abatement costs. We also report a market experiment that features abatement cost uncertainty and the opportunity for cost-reducing investment, with and without a price floor. Consistent with the theoretical model, investment is significantly greater with the price floor in place. Emissions permit prices also respond as predicted to abatement investments and emissions shocks. In particular, prices are only responsive to investment and shocks when the price floor is not implemented.