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On the Long-Run Efficiency of Auctioned vs. Free Permits

Author

Listed:
  • Kling, Catherine L.
  • Zhao, Jinhua

Abstract

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.

Suggested Citation

  • Kling, Catherine L. & Zhao, Jinhua, 2000. "On the Long-Run Efficiency of Auctioned vs. Free Permits," Staff General Research Papers Archive 1836, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:1836
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    References listed on IDEAS

    as
    1. Dennis W. Carlton & Glenn C. Loury, 1980. "The Limitations of Pigouvian Taxes as a Long-Run Remedy for Externalities," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(3), pages 559-566.
    2. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, January.
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    Citations

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    Cited by:

    1. Shinkuma, Takayoshi & Sugeta, Hajime, 2016. "Tax versus emissions trading scheme in the long run," Journal of Environmental Economics and Management, Elsevier, vol. 75(C), pages 12-24.
    2. Krysiak, Frank C., 2008. "Prices vs. quantities: The effects on technology choice," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1275-1287, June.
    3. Wang, Kun & Fu, Xiaowen & Luo, Meifeng, 2015. "Modeling the impacts of alternative emission trading schemes on international shipping," Transportation Research Part A: Policy and Practice, Elsevier, vol. 77(C), pages 35-49.
    4. Lambie, Neil Ross, 2010. "Understanding the effect of an emissions trading scheme on electricity generator investment and retirement behaviour: the proposed Carbon Pollution Reduction Scheme," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), pages 1-15.
    5. Jinhua Zhao, 2022. "Aggregate emission intensity targets: Applications to the Paris Agreement," Economic Inquiry, Western Economic Association International, vol. 60(4), pages 1875-1897, October.
    6. John Pezzey, 2003. "Emission Taxes and Tradeable Permits A Comparison of Views on Long-Run Efficiency," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(2), pages 329-342, October.
    7. Sonia Schwartz, 2009. "Comment distribuer les quotas de pollution ?. Une revue de la littérature," Revue d'économie politique, Dalloz, vol. 119(4), pages 535-568.
    8. Anthony Heyes, 2009. "Is environmental regulation bad for competition? A survey," Journal of Regulatory Economics, Springer, vol. 36(1), pages 1-28, August.
    9. Estay, Manuel & Stranlund, John K., 2022. "Entry, location, and optimal environmental policies," Resource and Energy Economics, Elsevier, vol. 70(C).
    10. Florent Pratlong, 2005. "Does the distribution of emission permits matter for international competitiveness?," Cahiers de la Maison des Sciences Economiques v05011, Université Panthéon-Sorbonne (Paris 1).
    11. Fridrik Baldursson & Jon Sturluson, 2011. "Fees and the Efficiency of Tradable Permit Systems: An Experimental Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(1), pages 25-41, January.
    12. Lambie, Neil Ross, 2009. "The role of real options analysis in the design of a greenhouse gas emissions trading scheme," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47626, Australian Agricultural and Resource Economics Society.
    13. Linghu, Dazhi & Wu, Xilin & Lai, Kee-Hung & Ye, Fei & Kumar, Ajay & Tan, Kim Hua, 2022. "Implementation strategy and emission reduction effectiveness of carbon cap-and-trade in heterogeneous enterprises," International Journal of Production Economics, Elsevier, vol. 248(C).
    14. Cao, Yu & Zhang, Xiaoling & Zhang, Xukun & Li, Heng, 2020. "The incremental construction land differentiated management framework: the perspective of land quota trading in China," Land Use Policy, Elsevier, vol. 96(C).
    15. Joni L. Jones & Gary J. Koehler, 2005. "A Heuristic for Winner Determination in Rule-Based Combinatorial Auctions," INFORMS Journal on Computing, INFORMS, vol. 17(4), pages 475-489, November.

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