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Public Policy: Using Market-Based Approaches ● Consumer choice can in theory have adverse effects for equality because there are likely to be vulnerable users who are unable to exercise their right to choose as effectively as others. Although all systems are likely to have winners and losers, ensuring that the introduction of choice does not lead to a less equitable outcome overall requires that these vulnerable users are identified and offered targeted support services. Such services are often most effective when offered in collaboration with voluntary sector organisations such as Citizens’ Advice Bureaux. Where possible, a system to identify nonparticipants rapidly should be put into place. ● Scheme design and implementation is important to achieve benefits and to avoid risks. Benefits will only be realised if the provider introducing choice is committed to doing so. ● The social rented property market has arguably adapted well to the introduction of choice because it has been able to increase the choice available to participants compared to the previous system, despite clear capacity constraints in high-demand areas. Where it is not possible to provide this increase in choice, for example, because users face prohibitively high costs in gathering and processing the necessary information, the dimension over which choice is being offered should be re-considered and/or an alternative market mechanism explored. ● There is some evidence that users can perceive a well-designed market process to be fairer than an administrative one, as long as it is sufficiently transparent and adequately addresses equity issues. To conclude, user choice is therefore most suited to government services where effective choice is a genuine possibility, vulnerable consumer groups can be easily identified and their needs met satisfactorily, and private provision is neither a desirable nor feasible option. 146
SECTION 11 Emissions Trading Introduction This case study looks at the introduction of a market for the trading of allowances 152 for greenhouse gas emissions in the UK, known as the UK Emissions Trading Scheme (UK-ETS), which was launched by the Department for Environment, Food and Rural Affairs (Defra) in April 2002. The scheme is part of a set of policy measures that comprise the UK Climate Change Programme (CCP). This is a program of policy measures which are designed to help the UK to reduce emissions of greenhouse gases. 153 This case study draws on the following sources of information: ● interviews with Chris Leigh and Jill Duggan from Defra’s National Climate Change Policy Division, with Christopher Moir from DTI, with Gareth Phillips, from SGS, one of the verifiers of the program and with Bill Edrich and Kay Beagley from Kirklees Council, one of the direct participants of the UK-ETS; ● a report by a task force led by Lord Marshall on Economic Instruments and the Business Use of Energy; ● an NAO study of the UK-ETS; ● NERA’s review of the first and second years of the UK Emissions trading scheme; and ● several documents provided by Defra. Background The UK Government, along with governments in many other countries, is concerned that emissions of certain pollutants, known as greenhouse gases, are causing changes to the world’s climate, and that this climate change represents a threat to human health and sustainable development. For this reason, many governments, through international treaties, have decided to act together to gradually reduce their emissions of these greenhouse-gas pollutants. In 1992, a framework was established under which the international community could take action to reduce greenhouse gas emissions: the United Nations Framework Convention on Climate Change (UNFCCC). 154 The Kyoto Protocol (the 152 In the economics literature these ‘allowances’ are often referred to as ‘permits’. These two terms are used interchangeably in this report. 153 Greenhouse gases are: Carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, hydrocarbons and perfluorocarbons. 154 Further information on the United Nations Framework Convention on Climate Change (UNFCCC) can be found on the following website: http://unfccc.int/2860.php. 147
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DTI ECONOMICS PAPER NO.14 Public Po
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DTI ECONOMICS PAPER NO.14 Public Po
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Contents Acknowledgements vi Forewo
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Contents Section 11 Emissions Tradi
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Foreword There is increasing intere
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SECTION 1 Introduction and summary
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Public Policy: Using Market-Based A
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SECTION 2 Using market mechanisms U
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SECTION 3 Lessons for the design an
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SECTION 4 Introduction This part of
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SECTION 7 Market-Based Mechanisms W
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SECTION 8 Framework for assessing m
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Part IV Case Studies 73
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● the Green and White papers behi
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A prison failing to deliver on its
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Table 9.3 Companies providing priso
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Section 9 - Competitive Tendering o
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detect any deviation from a collusi
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at HMPS began as an equal mix of th
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(e.g. lighting). This impact could
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MARKET POWER The full benefits of c
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However, it should be noted that te
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on competition is uncertain. The ab
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Page 111 and 112: The Independent Monitoring Board at
Page 113 and 114: Figure 9.1: Difference between the
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Page 117 and 118: design the invitation to tender and
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Page 121 and 122: and demand conditions. Second, we d
Page 123 and 124: DEMAND Anyone can apply to a local
Page 125 and 126: ● Rent deposit guarantee by the l
Page 127 and 128: The Green Paper stated the Governme
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Page 131 and 132: DESCRIPTION OF MARKET MECHANISM The
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Page 135 and 136: DEVELOPMENTS OVER TIME The major mo
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Page 141 and 142: In several areas, registrations by
Page 143 and 144: Controlling for information problem
Page 145 and 146: extent though, it was competition b
Page 147 and 148: Section 10 - Choice-Based Letting i
Page 149 and 150: levels are reducing and new tenants
Page 151 and 152: desired effect of limiting points-c
Page 153: efficiency savings in some areas. T
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Page 161 and 162: A more detailed and diagrammatic de
Page 163 and 164: The costs of monitoring and reporti
Page 165 and 166: INITIAL ALLOCATION OF PROPERTY RIGH
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Page 169 and 170: COST-EFFICIENT EMISSIONS REDUCTIONS
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