Profits from violating controls on the use of a polluting input
Profits from violating the quota, charge and permit market systems are compared. The results indicate that, for a given permit price, the violation profits of the charge and permit market systems are the same and exceed the profits from violating a quota system if the optimal use of inputs in a compliant market is lower than the quota. It is also shown that, under a permit market system, the occurrence of violation decreases the equilibrium price of permits. This implies that the profits from violating a permit market are lower than violation profits of a charge system. Copyright Kluwer Academic Publishers 1992
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Volume (Year): 2 (1992)
Issue (Month): 5 (September)
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References listed on IDEAS
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