IDEAS home Printed from https://ideas.repec.org/a/wly/jpamgt/v11y1992i4p553-572.html
   My bibliography  Save this article

The politics and economics of auction design in the market for sulfur dioxide pollution

Author

Listed:
  • Karl Hausker

Abstract

The Clean Air Act Amendments of 1990 aim to create a market in emissions of sulfur dioxide from power plants by distributing a fixed number of tradable pollution permits called “allowances,” and by providing for the auction of a small fraction of the total number of allowances. This article describes potential inefficiencies in this market and how an auction could enhance the market. It shows that the method by which allowances are “bundled together” for auction is an important efficiency-related element of auction design. The article also examines the politics of auction design and how equity goals strongly shaped the design ultimately adopted by Congress. Finally, some implications are suggested for the role of policy analysis in the legislative process.

Suggested Citation

  • Karl Hausker, 1992. "The politics and economics of auction design in the market for sulfur dioxide pollution," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 11(4), pages 553-572.
    • Handle: RePEc:wly:jpamgt:v:11:y:1992:i:4:p:553-572
    DOI: 10.2307/3324955
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2307/3324955
    File Function: Link to full text; subscription required
    Download Restriction: no
    File URL: https://libkey.io/10.2307/3324955?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. James M. Verdier, 1984. "Advising congressional decision-makers: Guidelines for economists," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 3(3), pages 421-438.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Burtraw, Dallas & Palmer, Karen, 2003. "The Paparazzi Take a Look at a Living Legend: The SO2 Cap-and-Trade Program for Power Plants in the United States," RFF Working Paper Series dp-03-15, Resources for the Future.
    2. Schwarze, Reimund & Zapfel, Peter, 1998. "Sulfur allowance trading and the regional clean air incentives market: How similar are the programs really?," MPRA Paper 52751, University Library of Munich, Germany, revised 02 Nov 1999.
    3. Richard J. Mccann, 1996. "Environmental Commodities Markets: ‘Messy’ Versus ‘Ideal’ Worlds," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 85-97, July.
    4. Laffont, Jean-Jacques & Tirole, Jean, 1996. "Pollution permits and compliance strategies," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 85-125, October.
    5. Schaltegger, Stefan & Thomas, Tom, 1996. "Pollution added credit trading (PACT): New dimensions in emissions trading," Ecological Economics, Elsevier, vol. 19(1), pages 35-53, October.
    6. Tietenberg, Tom, 1998. "Ethical influences on the evolution of the US tradable permit approach to air pollution control," Ecological Economics, Elsevier, vol. 24(2-3), pages 241-257, February.
    7. Reimund Schwarze & Peter Zapfel, 2000. "Sulfur Allowance Trading and the Regional Clean Air Incentives Market: A Comparative Design Analysis of two Major Cap-and-Trade Permit Programs?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(3), pages 279-298, November.
    8. Brookshire, David S & Burness, H Stuart, 2001. "The Informational Role of the EPA SO2 Permit Auction," Journal of Regulatory Economics, Springer, vol. 20(1), pages 43-60, July.
    9. Ben-David, Shaul & Brookshire, David S. & Burness, Stuart & McKee, Michael & Schmidt, Christian, 1999. "Heterogeneity, Irreversible Production Choices, and Efficiency in Emission Permit Markets," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 176-194, September.
    10. Hahn, Robert W., 2000. "The Impact of Economics on Environmental Policy," Journal of Environmental Economics and Management, Elsevier, vol. 39(3), pages 375-399, May.
    11. Abeygunawardena, P & Barba, Ricardo, 2000. "Emission Trading as a Tool for Environmental Management," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 3, pages 1-23.
    12. Pezzey, John C.V., 2001. "Distributing the Value of a Country’s Tradeable Carbon Permits," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125832, Australian Agricultural and Resource Economics Society.
    13. Shobe, William & Holt, Charles & Huetteman, Thaddeus, 2014. "Elements of emission market design: An experimental analysis of California's market for greenhouse gas allowances," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 402-420.
    14. Shobe, William & Holt, Charles & Huetteman, Thaddeus, 2014. "Elements of emission market design: An experimental analysis of California's market for greenhouse gas allowances," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 402-420.
    15. Paul L. Joskow & Richard Schmalensee & Elizabeth M. Bailey, 1996. "Auction Design and the Market for Sulfur Dioxide Emissions," NBER Working Papers 5745, National Bureau of Economic Research, Inc.
    16. Jacqueline Boucher & Yves Smeers, 2001. "Alternative Models of Restructured Electricity Systems, Part 1: No Market Power," Operations Research, INFORMS, vol. 49(6), pages 821-838, December.
    17. Joskow, Paul L & Schmalensee, Richard, 1998. "The Political Economy of Market-Based Environmental Policy: The U.S. Acid Rain Program," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 37-83, April.
    18. Dallas Burtraw & Keneth Harrison & Paul Turner, 1998. "Improving Efficiency in Bilateral Emission Trading," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(1), pages 19-33, January.
    19. Svendsen, Gert Tinggaard & Christensen, Jan Lien, 1999. "The US SO2 auction: analysis and generalization," Energy Economics, Elsevier, vol. 21(5), pages 403-416, October.
    20. Zhang, Zhong Xiang, 1999. "Should the rules of allocating emissions permits be harmonised?," Ecological Economics, Elsevier, vol. 31(1), pages 11-18, October.
    21. Shaul Ben-David & David Brookshire & Stuart Burness & Michael McKee & Christian Schmidt, 2000. "Attitudes toward Risk and Compliance in Emission Permit Markets," Land Economics, University of Wisconsin Press, vol. 76(4), pages 590-600.
    22. Burtraw, Dallas & McCormack, Kristen, 2017. "Consignment auctions of free emissions allowances," Energy Policy, Elsevier, vol. 107(C), pages 337-344.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joseph V. Cartwright, 1989. "Regional Science and Public Management," The Review of Regional Studies, Southern Regional Science Association, vol. 19(3), pages 1-3, Fall.
    2. Bryden, John Marshall & Mittenzwei, Klaus, 2010. "The Role And Importance Of Academic Freedom In The Policy Process," 50th Annual Conference, Braunschweig, Germany, September 29-October 1, 2010 93945, German Association of Agricultural Economists (GEWISOLA).
    3. Tilman Slembeck, 1997. "The Formation of Economic Policy: A Cognitive-Evolutionary Approach to Policy-Making," Constitutional Political Economy, Springer, vol. 8(3), pages 225-254, August.
    4. Bryden, J. & Mittenzwei, K., 2011. "The role and importance of academic freedom in the policy progress," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 46, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:jpamgt:v:11:y:1992:i:4:p:553-572. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/journal/34787/home .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.