Should Consumers Be Priced Out of Pollution-Permit Markets?
AbstractThe authors present a simple diagrammatic exposition of a pollution-permit market in which both firms that generate pollution and consumers who are harmed by pollution are allowed to purchase permits at a single market price. They show that the market equilibrium is efficient if and only if the endowment of permits is equal to the efficient level of pollution. Furthermore, if consumers actually participate in the market, then the equilibrium is not efficient. Welfare can be improved by decreasing the endowment of permits and thereby pricing consumers out of the market.
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Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal The Journal of Economic Education.
Volume (Year): 34 (2003)
Issue (Month): 2 (January)
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- Antoine Mandel, 2007.
"Welfare improvement properties of an allowance market in a production economy,"
UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers)
- Antoine Mandel, 2007. "Welfare improvement properties of an allowance market in a production economy," Documents de travail du Centre d'Economie de la Sorbonne b07029, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- Antoine Mandel, 2009. "Welfare Improvement Properties of an Allowance Market in a Production Economy," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) hal-00633358, HAL.
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