Environmental markets exacerbate inequalities

Stefan Ambec

No 20-1120, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: Environmental markets distribute tradable rights on natural resources that are available for free on the earth such as water, biomass or clean air. In a framework where users differ solely in respect of their access to the resource, I investigate the allocation of rights that are accepted in the sense that, after trading, users obtain at least what they can achieve by sharing the resources they control. I show that, among all accepted rights, the more egalitarian ones do not allow any redistribution among users. Consequently, compared to an efficient allocation of resources, the net trading of rights always increases inequality.

Keywords: Common-pool resources; environmental externalities; property rights; cooperative game; fairness; tradable quotas; emission permits. (search for similar items in EconPapers)
JEL-codes: C71 D02 D63 Q28 Q38 Q58 (search for similar items in EconPapers)
Date: 2020-07-03
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-gth
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Working Paper: Environmental markets exacerbate inequalities (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:124416

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