Construction Of The Legal System Of Emission Trading From The Perspective Of Economics Of Law

The paper analyzed the emission trading system (ETS) from the perspectiveof the economics of law. Many of the interests are involved in the ETS. And theeconomics of law can design a much better legal system in the way of analyzingthe transaction costs. Analysis from the perspective of the economics of law cangive us a different point of view with the traditional legal analysis.The first part of the thesis mainly introduced the definition and thecharacteristics of the ETS. The emission rights are scarce and it belongs to thewhole people, but it is managed by the government. The definition of the emissionrights includes two properties which are the public law property and the privatelaw property. The ETS market includes many different interests. In order to expandthe social benefits, I hold the opinion that we should analyze the ETS withmulti-disciplinary knowledge. The economics of law has the incomparableadvantage in analyzing the multi-disciplinary knowledge.The next three parts of the thesis analyzed the ETS deeply. The purpose of theETS is to solve the greenhouse effect. The tragedy of the commons is the reason why the greenhouse effect happens. In the process of using the environmentalresources, the different costs between the individual and the society make theindividuals lazy to protect the environment. Then the thesis compares thegovernment intervention theory and free-market theory. All of them have theadvantage and the disadvantage, the best solution is synthesizing the two theories.In the process of the environmental governance, we should adopt the free-markettheory to maximize the social benefit. At the same time, the government shouldmake laws to determine the property attribution of environmental resources toprotect the social fairness and stability. The ETS was designed by the aboveprinciples. Then the thesis discussed the design of the ETS from the perspective ofthe Coase Theorem. The basic principle of designing the ETS is minimizing thetransaction costs. Then the thesis divides the transaction costs into market costsand the government costs. We should control the additional costs caused by thegovernment. And the market costs are much more important. Then we thoroughlyanalyzed the market failure and government failure which will significantlyincrease transaction costs. At last we give some suggestions how to construct ourETS market using the view of the transaction costs.