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Cap-and-trade Properties under Different Hybrid Scheme Designs / G. Gruell and L. Taschini.  Journal of Environmental Economics and Management, 61(1), 2011, pp. 107-118.draft : http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1518102link to the journal : http://www.sciencedirect.com/science/journal/00950696This  paper examines the key design mechanisms of existing and proposed  cap-and-trade markets. First, it is shown that the hybrid systems under  investigation (safety-valve with offsets, price floor using a subsidy,  price collar, allowance reserve, and options offered by the regulator)  can be decomposed into a combination of an ordinary cap-and-trade scheme  with European or American-style call and put options. Then, we quantify  and discuss the advantages and disadvantages of the proposed hybrid  schemes by investigating whether pre-set objectives (enforcement of  permit price bounds and reduction of potential costs for relevant  companies) can be accomplished while maintaining the original  environmental targets. (© authors)