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Markets for environmental protection: design and performance incomplete enforcement

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  • Juan-Pablo Montero

Abstract

Policy makers in different parts of the world are paying more attention to environmental markets (i.e., tradeable permits markets) as an alternative to the traditional command-and-command control approach of setting uniform emission and technology standards. I extend the basic (perfect information) model of a permits market to accommodate for practical considerations including regulator’s asymmetric information on firms’ costs, uncertainty on benefits from pollution control, incomplete enforcement, incomplete monitoring of emissions and the possibility of voluntary participation of non-affected sources. Implications for instrument design and implementation are provided.

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Bibliographic Info

Article provided by University of Chile, Department of Economics in its journal Estudios de Economia.

Volume (Year): 31 (2004)
Issue (Month): 1 Year 2004 (June)
Pages: 79-99

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Handle: RePEc:udc:esteco:v:31:y:2004:i:1:p:79-99

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Web page: http://www.econ.uchile.cl/
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Related research

Keywords: Environmental regulation; permits markets; asymmetric information; incomplete enforcement.;

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Cited by:
  1. Bonacina, Monica & Gulli`, Francesco, 2007. "Electricity pricing under "carbon emissions trading": A dominant firm with competitive fringe model," Energy Policy, Elsevier, vol. 35(8), pages 4200-4220, August.

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