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Title Optimal Design of a Politically Feasible Environmental Regulation
Author Jongmin Yu (Hongik University) and Seokjong Ryu (Shanghai University of Finance and Economics)
Volume 34 Number 1
Pages 75-99 
Keywords Emission Trading, Price and Quantity, Hybrid Emission Control, Climate Change, Policy Instrument Choice
Abstract This paper discusses the optimal environmental regulation model that considers the
political support of the regulated agents. We suggest a hybrid emission control policy pair,
which combines a price (penalty) and a quantity control (emissions cap), and is efficient
from the regulators perspective. Regulated companies choose one of the lowest-cost policy
options within the pool of efficient hybrid policy pairs, and the regulator also prefers the
most popular policy option with the smallest political resistance from the industry. This
theoretic analysis provides an opportunity for policymakers to design acceptable regulation
File KER-20180101-34-1-04.pdf
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