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Transactions Costs in Tradeable Emissions Markets: an Empirical Study of the Regional Clean Air Incentives MArket in Los Angeles

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  • Gangadharan, L.

Abstract

This paper examines the Regional Clean Air Incentives MArket (RECLAIM) which was launched in Los Angeles in January 1994. RECLAIM is an emissions trading program which is expected to decrease hazardous pollutants from stationary sources in the South Coast Basin. I analyze the transactions data and conduct hedonic price regressions to find that the price of Reclaim Trading Credits is higher in the Nitrogen Oxide market as compared to the Sulfur Oxide market. Also prices in the coastal zone are higher than in the inland zone. The facility level data reveal that transactions costs can be very high for some facilities in RECLAIM. The transaction costs variables have been defined to include search costs and information costs. These costs are significant and are responsible for some facilities not entering the emissions market.

Suggested Citation

  • Gangadharan, L., 1997. "Transactions Costs in Tradeable Emissions Markets: an Empirical Study of the Regional Clean Air Incentives MArket in Los Angeles," Department of Economics - Working Papers Series 591, The University of Melbourne.
  • Handle: RePEc:mlb:wpaper:591
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    Cited by:

    1. Ananish Chaudhuri & Pushkar Maitra, 1997. "Determinants of Land Tenure Contracts; Theory and Evidence from Rural India," Departmental Working Papers 199710, Rutgers University, Department of Economics.
    2. Larson, Donald F. & Parks, Paul, 1999. "Risks, lessons learned, and secondary markets for greenhouse gas reductions," Policy Research Working Paper Series 2090, The World Bank.

    More about this item

    Keywords

    AIR ; ECONOMETRICS ; POLLUTION;

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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