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Tradable Permits with Incomplete Monitoring: Evidence from Santiago's Particulate Permits Programs

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  • Juan-Pablo Montero

    (Instituto de Economía. Pontificia Universidad Católica de Chile.)

Abstract

I 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.

Suggested Citation

  • Juan-Pablo Montero, 2005. "Tradable Permits with Incomplete Monitoring: Evidence from Santiago's Particulate Permits Programs," Documentos de Trabajo 278, Instituto de Economia. Pontificia Universidad Católica de Chile..
    • Handle: RePEc:ioe:doctra:278
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Asymmetric information; imperfect monitoring; pollution markets; permits;
    All these keywords.

    JEL classification:

    • 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

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