Have you seen this list that names names of which companies will have to participate in California's nascent carbon cap and trade market? I don't see my name mentioned but I still plan to buy some permits. I hold a diversified portfolio.
A young structural microeconomist might want to ask the following question; for each of the companies listed above how will they respond to the new regulation? Will they simply pay the market price of the permits? Will they innovate? Will they run to Texas? In a diverse world where firms differ with respect to their ability to reduce their emissions,how costly is regulation? Will new green consultant jobs appear because these firms will now seek to increase their energy efficiency and will team hire engineers and economists to work together to get rid of the waste? Could the Porter Hypothesis turn out to be true? Or do you believe that California has gone nuts as it embraces "Free market environmentalism"?
I'm excited about this experiment and this one of the reasons I continue to live in California. When the excitement ends, we will move to China. That's a nation where the students study hard and I like that.
