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Markets for environmental protection: design and performance incomplete enforcement

  • Juan-Pablo Montero

Policy makers in different parts of the world are paying more attention to environmental markets (i.e., tradeable permits markets) as an alternative to the traditional command-and-command control approach of setting uniform emission and technology standards. I extend the basic (perfect information) model of a permits market to accommodate for practical considerations including regulator’s asymmetric information on firms’ costs, uncertainty on benefits from pollution control, incomplete enforcement, incomplete monitoring of emissions and the possibility of voluntary participation of non-affected sources. Implications for instrument design and implementation are provided.

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Article provided by University of Chile, Department of Economics in its journal Estudios de Economia.

Volume (Year): 31 (2004)
Issue (Month): 1 Year 2004 (June)
Pages: 79-99

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Handle: RePEc:udc:esteco:v:31:y:2004:i:1:p:79-99
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  10. Juan-Pablo Montero & José Miguel Sánchez & Ricardo Katz, 2000. "A Market-Based Environmental Policy Experiment in Chile," Documentos de Trabajo 192, Instituto de Economia. Pontificia Universidad Católica de Chile..
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