Citizens' demand for permits and Kwerel''s incentive compatible mechanism for pollution control

Andrew Yates and Daniel English ()
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Daniel English: University of Richmond

Economics Bulletin, 2007, vol. 17, issue 4, 1-9

Abstract: An interesting feature of pollution permit markets is that citizens may purchase permits to directly lower the levels of pollution. Kwerel's mechanism (Review of Economic Studies~1977) is not incentive compatible when citizens demand permits. We show that a modification of Kwerel''s mechainism, the minimum-price mechanism, is incentive compatible when citizens demand permits, even in the case where there is uncertainty about the damages from pollution.

JEL-codes: D0 Q2 (search for similar items in EconPapers)
Date: 2007-02-01
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Citations: View citations in EconPapers (4)

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