2015/01/01 by Lisa Knoll, Knoll, Lisa
Economics, Econometrics and Finance · Energy · Social Sciences · #Climate Change Policy and Economics #Conventions #Energy, Environment, and Transportation Policies #European Union Emission Trading System #Social Issues and Policies #bureaucracy #efficiency #free-market hypothesis #law
paper · pdf · doi:10.12759/hsr.40.2015.1.132-149
openalex publication_date 2015/01/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
This article tracks the creation and maintenance of markets for emission rights and the role that law-creation plays within this process. From a recent example of a market creation – the European Emissions Trading Scheme (EU ETS) –, insights will be gained about the intrinsic and fundamental connections between market creation and bureaucratization. This process unfolds in a paradoxical way: The free-market hypothesis is, in fact, creating a demand for regulation, administration, and control. Law creation that is informed by the free-market hy-pothesis (the Law and Economics School in general, the EU Directive as a specific case), separates the "inside of the market” from the “outside of the market." This, firstly, causes a need for extra-administration at the "outside of the market" in order to resolve the uncertainty that emanates from the self-imposed requirement of leaving "the market itself" unregulated. And it, secondly, exposes the "rational actor” to an open and uncertain situation, which then leads to private regulative and administrative attempts at the "inside of the market."