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 â€¦firms. Testing the independence of â€¦firms' permit allocations and emissions is difficult because of endogeneity and omitted variable bias. We exploit the random assignment of 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 â€¦finding is that a null hypothesis of zero effect cannot be rejected.
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Bibliographic InfoPaper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt70f62476.
Date of creation: 01 Sep 2008
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air pollution; emissions trading; transaction costs;
Other versions of this item:
- Fowlie, Meredith & Perloff, Jeffrey M, 2008. "Distributing pollution rights in cap-and-trade programs : are outcomes independent of allocation?," CUDARE Working Paper Series 0968R, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
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