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Medientyp:
E-Artikel
Titel:
Using a Free Permit Rule to Forecast the Marginal Abatement Cost of Proposed Climate Policy
Beteiligte:
Meng, Kyle C.
Erschienen:
American Economic Association, 2017
Erschienen in:
The American Economic Review, 107 (2017) 3, Seite 748-784
Sprache:
Englisch
ISSN:
0002-8282
Entstehung:
Anmerkungen:
Beschreibung:
This paper develops a method for forecasting the marginal abatement cost (MAC) of climate policy using three features of the failed Waxman-Markey bill. First, the MAC is revealed by the price of traded permits. Second, the permit price is estimated using a regression discontinuity design (RDD) comparing stock returns of firms on either side of the policy's free permit cutoff rule. Third, because Waxman-Markey was never implemented, I extend the RDD approach to incorporate prediction market prices which normalize estimates by policy realization probabilities. A final bounding analysis recovers a MAC range of $5 to $19 per ton CO₂e.