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Efficiency and Distributional Aspects of Market Mechanisms in the Control of Pollution: An Empirical Analysis

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  • Hanley, Nick D
  • Moffatt, Ian

Abstract

This paper assesses the consequences of using tradable permits to achieve water quality goals in the Forth Estuary, Scotland. Both total loading reduction and ambient condition targets are considered. The existing form of control in the Estuary is described as flexible regulation, and in a static model is found to get very close to the least-cost outcome for removing a dissolved oxygen sag. For total loading reduction, the least-cost solution represents a large saving over uniform regulation, but there are significant obstacles to a permit system achieving the former outcome. A permit system is shown to be more equitable in terms of the financial burden of control access firms than uniform regulation. Copyright 1993 by Scottish Economic Society.

Suggested Citation

  • Hanley, Nick D & Moffatt, Ian, 1993. "Efficiency and Distributional Aspects of Market Mechanisms in the Control of Pollution: An Empirical Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 40(1), pages 69-87, February.
  • Handle: RePEc:bla:scotjp:v:40:y:1993:i:1:p:69-87
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    Cited by:

    1. Andvig, Jens Chr. & Moene, Karl Ove, 1990. "How corruption may corrupt," Journal of Economic Behavior & Organization, Elsevier, pages 63-76.
    2. Kjell Sunnevåg, 2003. "Auction Design for the Allocation of Emission Permits in the Presence of Market Power," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 385-400.
    3. Nils-Henrik Mørch von der Fehr, 1993. "Tradable emission rights and strategic interaction," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 129-151.
    4. Kampas, Athanasios & Mamalis, Spyridon, 2006. "Assessing the Distributional Impacts of Transferable Pollution Permits: The Case of Phosphorus Pollution Management at a River Basin Scale," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 7(2), August.
    5. Tao Wang, 2006. "Cost Effectiveness in River Management: Evaluation of Integrated River Policy System in Tidal Ouse," Working Papers 2006.142, Fondazione Eni Enrico Mattei.
    6. Kampas, Athanasios & White, Ben, 2003. "Selecting permit allocation rules for agricultural pollution control: a bargaining solution," Ecological Economics, Elsevier, vol. 47(2-3), pages 135-147, December.
    7. Dafna Eshel, 2005. "Optimal Allocation of Tradable Pollution Rights and Market Structures," Journal of Regulatory Economics, Springer, pages 205-223.

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