Tradable permits and unrealized gains from trade

Rolf Färe, Shawna Grosskopf and Carl Pasurka

Energy Economics, 2013, vol. 40, issue C, 416-424

Abstract: With the advent of tradable permit programs for bad outputs (e.g., SO2 emissions); concerns arose over whether the theoretical gains from trade would be realized. We will employ a methodology that calculates the potential gains accruing to coal-fired electric power plants from implementing a tradable permit program. The magnitude of the potential gains in a plant's kilowatt hour output from a tradable permit program relative to its observed production provides insights into the existence of intertemporal allocative inefficiencies and spatial allocative inefficiencies after the implementation of a tradable permit program.

Keywords: Tradable permits; SO2 emissions; Joint production model (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:40:y:2013:i:c:p:416-424

DOI: 10.1016/j.eneco.2013.07.015

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