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Tradable permits and unrealized gains from trade

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  • Färe, Rolf
  • Grosskopf, Shawna
  • Pasurka,, Carl A.
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    Abstract

    With the advent of tradable permit programs for bad outputs (e.g., SO2 emissions); concerns arose over whether the theoretical gains from trade would be realized. We will employ a methodology that calculates the potential gains accruing to coal-fired electric power plants from implementing a tradable permit program. The magnitude of the potential gains in a plant's kilowatt hour output from a tradable permit program relative to its observed production provides insights into the existence of intertemporal allocative inefficiencies and spatial allocative inefficiencies after the implementation of a tradable permit program.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 40 (2013)
    Issue (Month): C ()
    Pages: 416-424

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    Handle: RePEc:eee:eneeco:v:40:y:2013:i:c:p:416-424

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    Web page: http://www.elsevier.com/locate/eneco

    Related research

    Keywords: Tradable permits; SO2 emissions; Joint production model;

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    Cited by:
    1. Färe, Rolf & Grosskopf, Shawna & Pasurka, Carl A., 2014. "Potential gains from trading bad outputs: The case of U.S. electric power plants," Resource and Energy Economics, Elsevier, Elsevier, vol. 36(1), pages 99-112.

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