Tradable permits and unrealized gains from trade
AbstractWith 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 InfoArticle provided by Elsevier in its journal Energy Economics.
Volume (Year): 40 (2013)
Issue (Month): C ()
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Tradable permits; SO2 emissions; Joint production model;
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