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Environmental Commodities Markets: 'Messy' Versus 'Ideal' Worlds

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  • RICHARD J. MCCANN

Abstract

Adopting tradable permit market (TPM) programs to address air quality and water supply problems has become increasingly popular. However, economists evaluating these proposals have erred in comparing "ideal" permit markets with "messy" existing regulatory structures. In fact, permit markets also are likely to be "messy" due to the existing institutions and market imperfections. The physical and technological nature of these environmental commodities have and will continue to impose barriers to creating such markets. In addition, the analyses often do not adequately define the legal, management, and exchange institutions so as to capture how transaction costs and uncertainty will affect these markets. This paper identifies some specific factors that influence permit markets in environmental commodities and discusses the potential magnitudes of these effects. Copyright 1996 Western Economic Association International.

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  • Richard J. Mccann, 1996. "Environmental Commodities Markets: 'Messy' Versus 'Ideal' Worlds," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 85-97, July.
  • Handle: RePEc:bla:coecpo:v:14:y:1996:i:3:p:85-97
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    References listed on IDEAS

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    Cited by:

    1. Blackman, Allen & Harrington, Winston, 1998. "Using Alternative Regulatory Instruments to Control Fixed Point Air Pollution in Developing Countries: Lessons from International Experience," Discussion Papers dp-98-21, Resources For the Future.
    2. Michael Pröpper, 2015. "Emerging Markets for Nature and Challenges for the Ecosystem Service Approach," Development and Change, International Institute of Social Studies, vol. 46(2), pages 247-268, March.
    3. Sovacool, Benjamin K., 2011. "The policy challenges of tradable credits: A critical review of eight markets," Energy Policy, Elsevier, vol. 39(2), pages 575-585, February.
    4. Rouhi-Rad, Mani & Brozovic, Nicholas & Mieno, Taro, 2015. "Implications of Search Frictions for Tradeable Permit Markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205798, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    5. Zeuli, Kimberly A. & Skees, Jerry R., 2000. "Will Southern Agriculture Play A Role In A Carbon Market?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(02), August.
    6. Dowlatabadi, Hadi & Boyd, David & MacDonald, Jamie, 2004. "Model, Model on the Screen, What's the Cost of Going Green?," Discussion Papers dp-04-17, Resources For the Future.
    7. Call, Isabel L. & Lew, Daniel K., 2015. "Tradable permit programs: What are the lessons for the new Alaska halibut catch sharing plan?," Marine Policy, Elsevier, vol. 52(C), pages 125-137.

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