Enforcing Transferable Permit Systems in the Presence of Market Power

Carlos Chavez and John Stanlund

Environmental & Resource Economics, 2003, vol. 25, issue 1, 65-78

Abstract: We derive an enforcementstrategy for a transferable permit system inthe presence of market power that achievescomplete compliance in a cost-effective manner.We show that the presence of a firm with marketinfluence makes designing an enforcementstrategy more difficult than enforcing aperfectly competitive system. We alsore-consider Hahn's (1984) suggestion that afirm with market influence should be allocatedpermits so that it chooses to not participatein the permit market. When enforcement and itscosts are taken into account, Hahn's suggestiondoes not hold except in a very special case. Copyright Kluwer Academic Publishers 2003

Keywords: compliance; emissions trading; enforcement; environmental policy; market power; transferable permits (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (34)

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Working Paper: Enforcing Transferable Permit Systems in the Presence of Market Power (2000)
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DOI: 10.1023/A:1023646414602

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