Walrasian prices in a market with consumption rights

Carlos Hervés-Beloso, Francisco Martínez and Jorge Rivera

Working Papers from University of Chile, Department of Economics

Abstract: In this paper we consider an exchange economy where there is an external restriction for the consumption of goods. This restriction is defined by both a cap on consumption of certain commodities and the requirement of an amount of rights for the consumption of these commodities. The caps for consumption are imposed exogenously due to the negative effects that the consumption may produce. The consumption rights are distributed among the agents. This fact leads to the possibility of establishing licence or consumption rights markets. These consumption rights do not participate in agents' preferences, however the individual's budgetary constraint may be modified, leading to a reassignment of resources. The aim of this paper is to show the existence of a Walrasian equilibrium price system linking tradable rights prices with commodity prices.

Keywords: competitive equilibrium; quotas; consumption rights; cap-and-trade program. (search for similar items in EconPapers)
JEL-codes: D51 D62 Q52 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2010-07
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.econ.uchile.cl/uploads/publicacion/8932 ... 4f364f59acd45f8e.pdf (application/pdf)

Related works:
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:udc:wpaper:wp317

Access Statistics for this paper

More papers in Working Papers from University of Chile, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Mohit Karnani ().