According to the jury, "Ralf Martin, Mirabelle Muûls, Laure B. de Preux, and Ulrich J. Wagner receive the Erik Kempe Award for a novel and insightful analysis of how compensation to regulated firms should be designed. The study characterizes such a scheme, uses a recently developed data collection strategy, as well as quantifies the importance of designing the compensation scheme in an efficient way. As such, the study contributes significantly to our understanding of – and the solution to – an important economic problem. Furthermore, the analysis and results are not only of value for the academic community; they are also relevant for policy makers globally in their efforts to design cost-effective climate policy through emission trading."