An efficient mechanism to control correlated externalities: redistributive transfers and the coexistence of regional and global pollution permit markets
AbstractWe compare tradable permit markets and emission taxes as self-enforcing mechanisms to control correlated externality problems. By âcorrelatedâ we mean multiple pollutants that are jointly produced by a single source but which simultaneously cause differentiated regional and global externalities (e.g., smog and global warming). By âself-enforcingâ we mean mechanisms that account for the endogeneity that exists between competing jurisdictions in the setting of environmental policy within a federation of regions. We find that joint domestic and international permit markets are Pareto efficient, while joint emissions taxes are not.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Environmental Economics and Management.
Volume (Year): 49 (2005)
Issue (Month): 1 (January)
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- Arthur Caplan & Emilson Silva, 2002. "An Efficient Mechanism to Control Correlated Externalities: Redistributive Transfers and the Coexistence of Regional and Global Pollution Permit Markets," Working Papers 2002-23, Utah State University, Department of Economics.
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