On the Long-Run Efficiency of Auctioned vs. Free Permits
When marketable emission permits affect the entry and exit decisions of competitive firms, all permits should not be distributed free of charge. Depending on the nature of the pollutant, an optimal share of the permits should be auctioned with others freely distributed to ensure long-run efficiency. All of the permits should be auctioned for global pollutants, but for local pollutants, some of the permits should be free.
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|Date of creation:||01 Nov 2000|
|Publication status:||Published in Economics Letters, November 2000, vol. 69 no. 2, pp. 235-38|
|Contact details of provider:|| Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070|
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