Researchers release study on competitive effects of carbon regulation in the EU aviation industry
Get up to speed
Ertian Chen, Lichao Chen, and Lars Nesheim published a research paper measuring the competitive and welfare impacts of raising the effective carbon price for the aviation sector under the EU Emissions Trading System. The study constructs a two-stage aviation competition model with endogenous product entry, direct flight frequency, and pricing. Estimates show that overall consumer surplus declines by up to 34%, with declines of up to 95% in medium- and long-haul markets, while short-haul markets experience welfare gains due to capacity reallocation, and airline profits decline by 1%-42%. The study estimates that carbon tax revenues of $1.9 billion-$2.9 billion and the social value of avoided emissions of $2.7 billion-$4.0 billion can cover the private surplus losses.
AI-generated from reports · 23 hr agoUpdated
Coverage timeline
Follow the coverage to understand different sides of the event.
- arXiv q-finCarbon Regulation and Competition in European Aviation
The EU Emissions Trading System will substantially increase the effective carbon price faced by airlines. This study constructs a two-stage aviation competition model with endogenous product entry, direct flight frequency, and pricing. Estimates show that overall consumer surplus declines by up to 34%, with long- and medium-haul markets declining by up to 95%, while short-haul markets experience welfare gains due to capacity reallocation. Airline profits decline by 1%-42%. Carbon tax revenues of $1.9-$2.9 billion and the social value of avoided emissions of $2.7-$4.0 billion can offset the private surplus losses.
Trend of this event
- Comparable range current
- 5
- Comparable range peak
- 926 Oct 15:00
- Change in last 24 hours
- –
Trend compares only entities observed continuously and completely, so the range may be smaller than the current heat count. Hover or tap the chart for hourly heat; use left/right arrow keys.