Tradable Permits with Incomplete Monitoring: Evidence from Santiago’s Particulate Permits Program
AbstractI explore the advantages of tradable emission permits over uniform emission standards when the regulator has incomplete information on firms’ emissions and costs of production and abatement (e.g., air pollution in large cities). Because the regulator only observes each firm’s abatement technology but neither its emissions nor its output, there are cases in which standards can lead to lower emissions and, hence, welfare dominate permits. I then empirically examine these issues using evidence from a particulate permits market in Santiago, Chile.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0457.
Date of creation: Oct 2004
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asymmetric information; imperfect monitoring; pollution markets; permits;
Other versions of this item:
- Juan-Pablo Montero, 2004. "Tradable permits with incomplete monitoring - Evidence from Santiago's particulate permits program," Working Papers 0415, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-RES-2004-11-07 (Resource Economics)
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