Welfare Improvement Properties of an Allowance Market in a Production Economy
This paper studies the welfare improvement properties of a market of allowances in an economy with a single type of externality. We show that thanks to the opening of such a market the Pareto optima can be decentralized as marginal pricing equilibria. However, the set of equilibria is much larger than this of Pareto optima. In order to discriminate the efficient equilibria we introduce a demand revealing mechanism tailored for this framework.
|Date of creation:||01 Apr 2009|
|Date of revision:|
|Publication status:||Published in Annals of Economics and Statistics, 2009, 93/94, pp.67-77|
|Note:||View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00633358|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
References listed on IDEAS
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- Boyd, John III & Conley, John P., 1997. "Fundamental Nonconvexities in Arrovian Markets and a Coasian Solution to the Problem of Externalities," Journal of Economic Theory, Elsevier, vol. 72(2), pages 388-407, February.
- repec:adr:anecst:y:1994:i:36:p:05 is not listed on IDEAS
- Stefani C. Smith & Andrew J. Yates, 2003. "Should Consumers Be Priced Out of Pollution-Permit Markets?," The Journal of Economic Education, Taylor & Francis Journals, vol. 34(2), pages 181-189, January.
- Conley, John P. & Smith, Stefani C., 2005. "Coasian equilibrium," Journal of Mathematical Economics, Elsevier, vol. 41(6), pages 687-704, September.
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