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Markets for Tradeable Emission and Ambient Permits: A Dynamic Approach

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Author Info

  • Y. Ermoliev
  • M. Michalevich
  • A. Nentjes

Abstract

This paper discusses trade mechanisms in pollutionpermit markets. Proofs are given, that sequential,bilateral trade in tradeable emissions permitsconverges to a market equilibrium with minimal totalcosts of pollution control. If ambient or depositionpermits are traded, the convergence of bilateraltransactions occurs only in the case of a singlereceptor. For multiple receptors, the proof ofconvergence for tradeable emissions and ambientpermits is given for two trade mechanisms: sequential,multilateral trade and a Walrasian auction. Copyright Kluwer Academic Publishers 2000

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File URL: http://hdl.handle.net/10.1023/A:1008369611378
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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 15 (2000)
Issue (Month): 1 (January)
Pages: 39-56

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Handle: RePEc:kap:enreec:v:15:y:2000:i:1:p:39-56

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: bilateral and multilateral trade; sequential; tradeable emission and ambient permits; Walrasian auction;

References

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  1. Krupnick, Alan J. & Oates, Wallace E. & Van De Verg, Eric, 1983. "On marketable air-pollution permits: The case for a system of pollution offsets," Journal of Environmental Economics and Management, Elsevier, vol. 10(3), pages 233-247, September.
  2. Stavins, Robert, 2004. "Environmental Economics," Discussion Papers dp-04-54, Resources For the Future.
  3. Ermoliev, Yuri & Klaassen, Ger & Nentjes, Andries, 1996. "Adaptive Cost-Effective Ambient Charges under Incomplete Information," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 37-48, July.
  4. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
  5. Ger Klaassen & Finn Førsund & Markus Amann, 1994. "Emission trading in Europe with an exchange rate," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 4(4), pages 305-330, August.
  6. Hahn, Robert W., 1986. "Trade-offs in designing markets with multiple objectives," Journal of Environmental Economics and Management, Elsevier, vol. 13(1), pages 1-12, March.
  7. Atkinson, Scott & Tietenberg, Tom, 1991. "Market failure in incentive-based regulation: The case of emissions trading," Journal of Environmental Economics and Management, Elsevier, vol. 21(1), pages 17-31, July.
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Citations

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Cited by:
  1. Odd Godal & Yuri Ermoliev & Ger Klaassen & Michael Obersteiner, 2003. "Carbon Trading with Imperfectly Observable Emissions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(2), pages 151-169, June.
  2. Chao-Ning Liao, 2009. "Technology adoption decisions under a mixed regulatory system of tradable permits and air pollution fees for the control of Total Suspended Particulates in Taiwan," Journal of Regulatory Economics, Springer, vol. 35(2), pages 135-153, April.
  3. Klaassen, Ger & Nentjes, Andries & Smith, Mark, 2005. "Testing the theory of emissions trading: Experimental evidence on alternative mechanisms for global carbon trading," Ecological Economics, Elsevier, vol. 53(1), pages 47-58, April.
  4. Flåm, S. D. & Ermoliev, Y. M., 2009. "Investment, uncertainty, and production games," Environment and Development Economics, Cambridge University Press, vol. 14(01), pages 51-66, February.
  5. R. Prabodanie & John Raffensperger & Mark Milke, 2010. "A Pollution Offset System for Trading Non-Point Source Water Pollution Permits," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 45(4), pages 499-515, April.
  6. Catherine Boemare & Philippe Quirion, 2002. "Implementing greenhouse gas trading in Europe: lessons from economic literature and international experiences," Post-Print halshs-00007264, HAL.
  7. Smith, Craig M. & Peterson, Jeffrey M. & Leatherman, John C. & Williams, Jeffery R., 2012. "A Simulation of Factors Impeding Water Quality Trading," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 42(2).
  8. Hung, Ming-Feng & Shaw, Daigee, 2005. "A trading-ratio system for trading water pollution discharge permits," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 83-102, January.
  9. Bristow, Abigail L. & Wardman, Mark & Zanni, Alberto M. & Chintakayala, Phani K., 2010. "Public acceptability of personal carbon trading and carbon tax," Ecological Economics, Elsevier, vol. 69(9), pages 1824-1837, July.
  10. der Straeten, Bart Van & Buysse, Jeroen & Nolte, Stephan & Lauwers, Ludwig & Claeys, Dakerlia & Van Huylenbroeck, Guido, 2011. "Markets of concentration permits: The case of manure policy," Ecological Economics, Elsevier, vol. 70(11), pages 2098-2104, September.
  11. Liao, Chao-Ning, 2007. "Modelling a mixed system of air pollution fee and tradable permits for controlling nitrogen oxide: a case study of Taiwan," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(4), December.
  12. Flåm, S.D. & Godal, O., 2008. "Market clearing and price formation," Journal of Economic Dynamics and Control, Elsevier, vol. 32(3), pages 956-977, March.
  13. Van der Straeten, Bart & Buysse, Jeroen & Nolte, Stephan & Lauwers, Ludwig H. & Claeys, Dakerlia & Van Huylenbroeck, Guido, 2011. "Policy intervention in a concentration permit market: efficiency analysis of obligatory manure processing in Flanders," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114832, European Association of Agricultural Economists.
  14. Peterson, Jeffrey M. & Smith, Craig M. & Valentin, Luc, 2005. "A Water Quality Trading Simulation for Northeast Kansas," 2005 Annual meeting, July 24-27, Providence, RI 19167, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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