Trading Quasi-emission Permits.Vers. 6/2003

Juan-Pablo Montero

No 201, Documentos de Trabajo from Instituto de Economia. Pontificia Universidad Católica de Chile.

Abstract: I study the design of environmental policies for a regulator that has incomplete information on firms' emissions and costs of production and abatement (e.g., air pollution in cities with numerous small polluting sources). Because of incomplete information on emissions, there is no policy that can implement the first-best. Since the regulator can observe firms' abatement technologies, however, it is possible to design a quasi-emissions trading program based on this information and show that it can provide higher welfare than command-and control regulation such as technology or emission standards. I then empirically examine this claim using evidence from a particulate quasi-emissions trading program in Santiago, Chile.

Date: 2002
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Published as "Pollution Markets with Imperfectly Observed Emissions", RAND Journal of Economics 36, pp. 645-660, 2005.

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Persistent link: https://EconPapers.repec.org/RePEc:ioe:doctra:201

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