Tradeable Emission Permits in Oligopoly

Chaim Fershtman and Aart de Zeeuw

No 275612, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: The paper considers an oligopolistic industry in which pollution is a by-product of production. Firms are assumed to have emission permits that restrict the amount that they pollute. These permits are assumed to be tradeable and the paper discusses a structure in which the same set of firms operates both in the product market as well as in the pollution permits market. The paper demonstrates that in such a structure allowing trade in emission permits is not necessarily beneficial. In particular it may lead to the choice of inferior production and abatement technologies, it may lead to a market equilibrium with lower output rates and higher prices and it may result in a shift of production from a low cost to a high cost firm.

Keywords: Financial Economics; International Relations/Trade (search for similar items in EconPapers)
Pages: 44
Date: 1995-12
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Citations: View citations in EconPapers (1)

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https://ageconsearch.umn.edu/record/275612/files/TEL-AVIV-FSWP-249.pdf (application/pdf)

Related works:
Working Paper: Tradeable Emission Permits in Oligopoly (1996)
Working Paper: Tradeable Emission Permits in Oligopoly (1996)
Working Paper: Tradeable Emission Permits in Oligopoly (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:isfiwp:275612

DOI: 10.22004/ag.econ.275612

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