Designing Organizations for Trading Pollution Rights

John Ledyard and Kristin Szakaly-Moore
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John Ledyard: Caltech
Kristin Szakaly-Moore: Caltech

Experimental from EconWPA

Abstract: Regulators and academicians have recently become interested in using a marketable permits program as a new way to control aggregate pollution emissions. Our research focuses on choosing a permit trading mechanism that is both economically efficient and politically viable. We consider an organized trading process and a revenue neutral auction, both of which involve an initial allocation of permits based on past history. Each is tested in a non-monopolistic and monopolistic environment to determine which mechanism performs best. The results suggest that, overall, the organized trading process outperforms the revenue neutral auction.

JEL-codes: C9 (search for similar items in EconPapers)
Date: 1993-07-26, Revised 1993-07-28
Note: Paper and two figure files have been submitted
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpex:9307001

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