Strategic trade in pollution permits

Alex Dickson () and Ian MacKenzie

No 554, Discussion Papers Series from University of Queensland, School of Economics

Abstract: Markets for pollution have become a popular regulatory instrument. Yet these markets are often highly concentrated, which may lead to strategic behavior by all participants. 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. Our framework establishes the endogenous determination of equilibrium price, market structure, and levels of exchange in the permit market.

Keywords: Pollution market; Market power; Strategic market game (search for similar items in EconPapers)
JEL-codes: C72 D43 D51 L13 Q53 (search for similar items in EconPapers)
Date: 2016-01-29
New Economics Papers: this item is included in nep-com, nep-ene, nep-gth, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://economics.uq.edu.au/files/46110/554.pdf (application/pdf)

Related works:
Journal Article: Strategic trade in pollution permits (2018)
Working Paper: Strategic trade in pollution permits (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:qld:uq2004:554

Access Statistics for this paper

More papers in Discussion Papers Series from University of Queensland, School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by SOE IT ().