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Economic Implications of Emissions Trading Rules for Local and Regional Pollutants


  • Scott E. Atkinson
  • T. H. Tietenberg


In 1975 the United States Environmental Protection Agency initiated an historic process of regulatory reform, now known as the Emissions Trading Program. For nonuniformly-mixed pollutants, such as sulfur dioxides, air quality is a function not only of the level of emissions, but their location and stack heights as well. The focus of this paper is how to protect local air quality and limit long-range pollutant deposition caused by emission trades, while allowing as much cost-reducing trading activity as possible. The authors examine the implications of two trading rules in two different airsheds using programming simulation models. They find that the use of either trading rule represents a substantial improvement over relying exclusively on the current allocation of control responsibility.

Suggested Citation

  • Scott E. Atkinson & T. H. Tietenberg, 1987. "Economic Implications of Emissions Trading Rules for Local and Regional Pollutants," Canadian Journal of Economics, Canadian Economics Association, vol. 20(2), pages 370-386, May.
  • Handle: RePEc:cje:issued:v:20:y:1987:i:2:p:370-86

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    References listed on IDEAS

    1. Appelbaum, Elie & Katz, Eliakim, 1996. "Corporate taxation, incumbency advantage and entry," European Economic Review, Elsevier, vol. 40(9), pages 1817-1828, December.
    2. Michel Poitevin, 1998. "Effects of the Fiscal Treatment of Tax Losses on the Efficiency of Markets and the Incidence of Mergers," CIRANO Working Papers 98s-33, CIRANO.
    3. Elie Appelbaum, 2002. "Union Contracts and the Firm's Financial Structure," Working Papers 2002_12, York University, Department of Economics.
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    Cited by:

    1. Frans P. Vries & Nick Hanley, 2016. "Incentive-Based Policy Design for Pollution Control and Biodiversity Conservation: A Review," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 687-702, April.
    2. der Straeten, Bart Van & Buysse, Jeroen & Nolte, Stephan & Lauwers, Ludwig & Claeys, Dakerlia & Van Huylenbroeck, Guido, 2011. "Markets of concentration permits: The case of manure policy," Ecological Economics, Elsevier, vol. 70(11), pages 2098-2104, September.
    3. Krysiak, Frank C. & Schweitzer, Patrick, 2010. "The optimal size of a permit market," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 133-143, September.
    4. repec:pri:cepsud:103bradford is not listed on IDEAS
    5. Sovacool, Benjamin K., 2015. "The political economy of pollution markets: Historical lessons for modern energy and climate planners," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 943-953.
    6. Nielsen, Rasmus, 2012. "Introducing individual transferable quotas on nitrogen in Danish fresh water aquaculture: Production and profitability gains," Ecological Economics, Elsevier, vol. 75(C), pages 83-90.
    7. Denise Mauzerall & Babar Sultan & Namsoug Kim & David F. Bradford, 2004. "Charging NOx Emitters for Health Damages: An Exploratory Analysis," NBER Working Papers 10824, National Bureau of Economic Research, Inc.
    8. Van der Straeten, Bart & Buysse, Jeroen & Nolte, Stephan & Lauwers, Ludwig H. & Claeys, Dakerlia & Van Huylenbroeck, Guido, 2011. "Policy intervention in a concentration permit market: efficiency analysis of obligatory manure processing in Flanders," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114832, European Association of Agricultural Economists.
    9. David Letson, 1992. "Investment decisions and transferable discharge permits: An empirical study of water quality management under policy uncertainty," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(5), pages 441-458, September.
    10. Henderson, J Vernon, 1996. "Effects of Air Quality Regulation," American Economic Review, American Economic Association, vol. 86(4), pages 789-813, September.
    11. B.S., Min, 2001. "Regional cooperation for control of transboundary air pollution in East Asia," Journal of Asian Economics, Elsevier, vol. 12(1), pages 137-153.
    12. Heister, Johannes & Michelis, Peter, 1991. "Designing markets for CO 2 emissions and other pollutants," Kiel Working Papers 490, Kiel Institute for the World Economy (IfW).
    13. Glenn Jenkins & RANJIT LAMECH, 1992. "Market-Based Incentive Instruments For Pollution Control," Development Discussion Papers 1992-02, JDI Executive Programs.
    14. R. Devlin & R. Grafton, 1994. "Tradeable permits, missing markets, and technology," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(2), pages 171-186, April.
    15. Cansino, José M. & Pablo-Romero, María del P. & Román, Rocío & Yñiguez, Rocío, 2010. "Tax incentives to promote green electricity: An overview of EU-27 countries," Energy Policy, Elsevier, vol. 38(10), pages 6000-6008, October.

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