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Citizens' demand for permits and Kwerel''s incentive compatible mechanism for pollution control

Author

Listed:
  • Andrew Yates

    (University of Richmond)

  • Daniel English

    (University of Richmond)

Abstract

An interesting feature of pollution permit markets is that citizens may purchase permits to directly lower the levels of pollution. Kwerel's mechanism (Review of Economic Studies~1977) is not incentive compatible when citizens demand permits. We show that a modification of Kwerel''s mechainism, the minimum-price mechanism, is incentive compatible when citizens demand permits, even in the case where there is uncertainty about the damages from pollution.

Suggested Citation

  • Andrew Yates & Daniel English, 2007. "Citizens' demand for permits and Kwerel''s incentive compatible mechanism for pollution control," Economics Bulletin, AccessEcon, vol. 17(4), pages 1-9.
  • Handle: RePEc:ebl:ecbull:eb-07q20001
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Asproudis, Elias & Weyman-Jones, Tom, 2011. "Third parties �participation in tradable permits market. Do we need them?," MPRA Paper 28766, University Library of Munich, Germany.
    2. Nava Kahana & Yosef Mealem & Shmuel Nitzan, 2009. "The Efficient and Fair Approval of “Multiple‐Cost‐Single‐Benefit” Projects under Unilateral Information," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(6), pages 947-960, December.
    3. Peifang Yang & Daniel T. Kaffine, 2016. "Community-Based Tradable Permits for Localized Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 773-788, December.

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    More about this item

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • D0 - Microeconomics - - General

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