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Tradable permits and unrealized gains from trade

  • Färe, Rolf
  • Grosskopf, Shawna
  • Pasurka,, Carl A.

With the advent of tradable permit programs for bad outputs (e.g., SO2 emissions); concerns arose over whether the theoretical gains from trade would be realized. We will employ a methodology that calculates the potential gains accruing to coal-fired electric power plants from implementing a tradable permit program. The magnitude of the potential gains in a plant's kilowatt hour output from a tradable permit program relative to its observed production provides insights into the existence of intertemporal allocative inefficiencies and spatial allocative inefficiencies after the implementation of a tradable permit program.

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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 40 (2013)
Issue (Month): C ()
Pages: 416-424

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Handle: RePEc:eee:eneeco:v:40:y:2013:i:c:p:416-424
Contact details of provider: Web page: http://www.elsevier.com/locate/eneco

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