Abstract
We study the optimal choice of abatement intensity and certificate purchase for the case that pollution levels are only partly influenced by abatement levels. We find that this uncertainty makes the complementary use of penalties for exceeding allowed waste levels necessary. Also the stochasticity may lead to the situation that a prediction of firm behavior with respect to changes in the parameters is impossible. At last we find that different initial endowments with pollution rights won't change abatement intensity and that abatement level and certificate purchase can be substitutes as well as complements.
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