Murray Fulton () (Johnson-Shoyama Graduate School of Public Policy, Diefenbaker Building, University of Saskatchewan, Saskatoon, SK S7N 5B8, Canada; Phone (306) 966-8507) James Vercammen () (Food and Resource Economics and Sauder School of Business, 2053 Main Mall, University of British Columbia, Vancouver, BC V6T 1Z2, Canada; Phone (604) 822-8475)
Abstract
This article examines the optimal two-part pricing by an intermediary in a carbon offset market. In addition to creating a framework for analyzing carbon offset pricing, this article makes two contributions to the theoretical literature. First, we provide an in-depth examination of the roles played by the upstream inframarginal supply and participation elasticities and the downstream demand elasticity in determining the optimal two-part pricing strategy. Second, we compare the pricing decisions of three different organizational types: a for-profit firm, a public agency, and a producer association. The producer association problem, which has received little attention in the literature, yields counterintuitive results because a producer association must simultaneously reduce output and distribute all profits back to its members.
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Volume (Year): 76 (2009) Issue (Month): 2 (October) Pages: 513-532 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters