Strategic trade in pollution permits

Alex Dickson () and Ian MacKenzie

Journal of Environmental Economics and Management, 2018, vol. 87, issue C, 94-113

Abstract: Markets for pollution have become a popular regulatory instrument. In this article we investigate the implications of strategic trade in pollution permits. The permit market is developed as a strategic market game, where all firms are allowed to behave strategically and their roles as buyers or sellers of permits are determined endogenously with price-mediated trade. In a second stage, firms transact on a product market and we allow for a variety of market structures. We identify a unique equilibrium in permit exchange, investigate the properties of this equilibrium, and consider the effect of strategic behavior in the product market.

Keywords: Pollution market; Market power; Strategic market game (search for similar items in EconPapers)
JEL-codes: D43 Q52 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Strategic trade in pollution permits (2016)
Working Paper: Strategic trade in pollution permits (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:87:y:2018:i:c:p:94-113

DOI: 10.1016/j.jeem.2017.04.009

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