Regulating Stock Externalities

Research output: Working paperOther research output

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Abstract

We develop a dynamic regulation game for a stock externality under asymmetric information and future market uncertainty. Within this framework, regulation is characterized as the implementation of a welfare-maximization program conditional on informational constraints. We identify the most general executable such programs and find these yield simple and intuitive policy rules. We apply our theory to carbon dioxide emissions trading schemes and find substantial welfare gains are possible, compared to current practices.
Original languageEnglish
Place of PublicationTilburg
PublisherCESifo Working Papers
Number of pages46
Publication statusPublished - Dec 2018

Publication series

NameCESifo Working Papers
Volume7383/2018

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Stock externalities
Carbon dioxide emissions
Asymmetric information
Emissions trading scheme
Policy rules
Welfare gains
Market uncertainty

Keywords

  • asymmetric information
  • regulatory instruments
  • policy updating
  • emission trading
  • pollution
  • climate change

Cite this

Gerlagh, R., & Heijmans, R. J. R. K. (2018). Regulating Stock Externalities. (CESifo Working Papers; Vol. 7383/2018). Tilburg: CESifo Working Papers.
Gerlagh, Reyer ; Heijmans, Roweno J.R.K. / Regulating Stock Externalities. Tilburg : CESifo Working Papers, 2018. (CESifo Working Papers).
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Gerlagh, R & Heijmans, RJRK 2018 'Regulating Stock Externalities' CESifo Working Papers, vol. 7383/2018, CESifo Working Papers, Tilburg.

Regulating Stock Externalities. / Gerlagh, Reyer; Heijmans, Roweno J.R.K.

Tilburg : CESifo Working Papers, 2018. (CESifo Working Papers; Vol. 7383/2018).

Research output: Working paperOther research output

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KW - policy updating

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KW - pollution

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Gerlagh R, Heijmans RJRK. Regulating Stock Externalities. Tilburg: CESifo Working Papers. 2018 Dec. (CESifo Working Papers).