Take your way

two ways to reduce carbon 1. carbon tax 2. carbon cap and trade

  1. Weak carbon reductions.

  2. customer surplus vs pollution tradeoff

  3. focusing on permit allocation mechanism

  4. free permit allocation mechanism: grandfather/ benchmarking

lumpsum 一次性支付的金额 customer surplus: 愿意支付的金额与市场价格之差

heterogeneous convex abatement 减少

Literature: Pollution regulation of competitive markets 2020

Cournot competition

a single compliance cycle

permit trading cost(revenue):