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Title: Trade-offs between environmental regulation and market competition: airlines, emission trading systems and entry deterrence
Authors: Barbot, Cristina
Betancor Cruz, Ofelia María 
Socorro Quevedo, María del Pilar 
Viecens ,Maria Fernanda 
UNESCO Clasification: 531212 Transportes y comunicaciones
Keywords: Aerolíneas
Política de la competencia
Issue Date: 2014
Publisher: 0967-070X
Journal: Transport Policy 
Abstract: The emission trading system (ETS) is being applied worldwide in different economic sectors as an environmental regulatory tool to induce reductions of CO2 emissions. In Europe the system has been applied since 2005 to energy intensive installations and, since January the 1st 2012, to airlines with flights arriving and departing from Community airports. Regulators should consider not only the efficiency of the ETS in reaching an environmental goal, but also its implications for market competition. In this work, we develop a theoretical model that analyses the European ETS[U+05F3]s main features as devised for airlines, focusing on its effects on potential competition and entry deterrence. Contrary to other economic activities under an ETS, potential competition is usual in most airline markets. Our results indicate that the share of capped allowances allocated initially for free to air operators may be a key element in deterring or allowing entry into the market. This result may be against the European principle of promoting competition and may represent a step backwards in the construction of a single European air transport market.
ISSN: 0967-070X
DOI: 10.1016/j.tranpol.2014.02.008
Source: Transport Policy[ISSN 0967-070X],v. 33, p. 65-72
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