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The Potential for Cost Savings in the Sulfur Dioxide Allowance Market: Empirical Evidence from Florida

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  • John R. Swinton

Abstract

Since the passage of the 1990 Clean Air Act Amendments, researchers have hastened to appraise the new market for sulfur dioxide (SO2) emission allowances. As the EPA’s program moves into its second phase, some analysts question whether large enough savings are available to induce widespread market participation. This study calculates the shadow prices of emission reductions for power plants that serve Florida and compares the actions of utility owners to the actions predicted by the shadow prices. The evidence suggests that plant owners have not taken full advantage of the opportunities the allowance market has provided to date.

Suggested Citation

  • John R. Swinton, 2002. "The Potential for Cost Savings in the Sulfur Dioxide Allowance Market: Empirical Evidence from Florida," Land Economics, University of Wisconsin Press, vol. 78(3), pages 390-404.
    • Handle: RePEc:uwp:landec:v:78:y:2002:i:3:p:390-404
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    References listed on IDEAS

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    1. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
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    3. Hahn, Robert W, 1989. "Economic Prescriptions for Environmental Problems: How the Patient Followed the Doctor's Orders," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 95-114, Spring.
    4. John R. Swinton, 1998. "At What Cost do We Reduce Pollution? Shadow Prices of SO2 Emissions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 63-83.
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    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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