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Designing a Market for Tradable Emissions Permits

Hahn, Robert W. and Noll, Roger G. (1981) Designing a Market for Tradable Emissions Permits. Social Science Working Paper, 398. California Institute of Technology , Pasadena, CA. (Unpublished)

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The economics literature shows that tradable emissions permits have important theoretical advantages over source-specific technical standards as a means for controlling pollution. But efficient, competitive markets in emissions may also be difficult to implement: transactions may be few with high negotiation costs; the market may be highly concentrated. Simple workable versions of the market concept may fail to take account of important complexities in the relationship between the pattern of emissions and the geographical distribution of pollution. This paper examines the feasibility of tradable permits, given these potential problems. Although the empirical part of the paper deals with a specific case—particulate sulfates in the Los Angeles airshed—the methods developed for investigating these issues have general applicability. Moreover, the particular market design that is proposed—an auction process that involves no net revenue collection by the state—has attractive features as a general model.

Item Type:Report or Paper (Working Paper)
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Additional Information:The work reported here was supported by the California Air Resources Board, Glen Cass provided useful comments on an earlier draft, and Richard Hanson provided data management support. The authors are solely responsible for the contents of this paper. Published in Reform of Environmental Regulation, edited by Wesley Magat. Lexington, MA: Lexington Books, 1982.
Group:Social Science Working Papers
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California Air Resources BoardUNSPECIFIED
Series Name:Social Science Working Paper
Issue or Number:398
Record Number:CaltechAUTHORS:20171004-162311512
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82095
Deposited By: Jacquelyn Bussone
Deposited On:05 Oct 2017 00:08
Last Modified:03 Oct 2019 18:50

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