Welfare improvement properties of an allowance market in a production economy
AbstractThis paper studies the welfare improvement properties of a market of allowances in an economy with a single type of externality. We show that thanks to the opening of such a market the Pareto optima can be decentralized as marginal pricing equilibria. However, the set of equilibria is much larger than this of Pareto optima. In order to discriminate the efficient equilibria we introduce a demand revealing mechanism tailored for this framework.
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Bibliographic InfoPaper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00155803.
Date of creation: May 2007
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General equilibrium theory; Pareto optimality; externalities; markets of allowances.;
Other versions of this item:
- Antoine Mandel, 2009. "Welfare Improvement Properties of an Allowance Market in a Production Economy," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) hal-00633358, HAL.
- Antoine Mandel, 2007. "Welfare improvement properties of an allowance market in a production economy," Documents de travail du Centre d'Economie de la Sorbonne b07029, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
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- Boyd, John III & Conley, John P., 1997. "Fundamental Nonconvexities in Arrovian Markets and a Coasian Solution to the Problem of Externalities," Journal of Economic Theory, Elsevier, vol. 72(2), pages 388-407, February.
- Conley, John P. & Smith, Stefani C., 2005. "Coasian equilibrium," Journal of Mathematical Economics, Elsevier, vol. 41(6), pages 687-704, September.
- Stefani C. Smith & Andrew J. Yates, 2003. "Should Consumers Be Priced Out of Pollution-Permit Markets?," The Journal of Economic Education, Taylor & Francis Journals, vol. 34(2), pages 181-189, January.
- Jean-Marc BONNISSEAU, 1994. "Caractérisation des optima de pareto dans une économie avec effets externes," Annales d'Economie et de Statistique, ENSAE, issue 36, pages 97-112.
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