Distributing pollution rights in cap-and-trade programs : are outcomes independent of allocation?
AbstractAccording to the Coase theorem, if property rights to pollute are clearly established and emissions permit markets nearly eliminate transaction costs, the permit market equilibrium will be independent of how the permits are initially distributed among Ã¢â¬Â¦firms. Testing the independence of Ã¢â¬Â¦firms' permit allocations and emissions is difficult because of endogeneity and omitted variable bias. We exploit the random assignment of Ã¢â¬Â¦firms to different permit allocation cycles in Southern California's RECLAIM Program to test for a causal relationship between facility-level emissions and initial permit allocations. Our primary Ã¢â¬Â¦finding is that a null hypothesis of zero effect cannot be rejected.
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Bibliographic InfoPaper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 0968R.
Date of creation: 2008
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Other versions of this item:
- Fowlie, Meredith & Perloff, Jeffrey M., 2008. "Distributing Pollution Rights in Cap-and-Trade Programs: Are Outcomes Independent of Allocation?," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt70f62476, Department of Agricultural & Resource Economics, UC Berkeley.
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