Distributing Pollution Rights in Cap-and-Trade Programs: Are Outcomes Independent of Allocation?

Meredith Fowlie and Jeffrey Perloff

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: According to the Coase theorem, if property rights to pollute are clearly established and emissions permit markets nearly eliminate transaction costs, the permit market equilibrium will be independent of how the permits are initially distributed among …firms. Testing the independence of …firms' permit allocations and emissions is difficult because of endogeneity and omitted variable bias. We exploit the random assignment of …firms to different permit allocation cycles in Southern California's RECLAIM Program to test for a causal relationship between facility-level emissions and initial permit allocations. Our primary …finding is that a null hypothesis of zero effect cannot be rejected.

Keywords: air pollution; emissions trading; transaction costs (search for similar items in EconPapers)
Date: 2008-09-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.escholarship.org/uc/item/70f62476.pdf;origin=repeccitec (application/pdf)

Related works:
Working Paper: Distributing pollution rights in cap-and-trade programs: are outcomes independent of allocation? (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdl:agrebk:qt70f62476

Access Statistics for this paper

More papers in Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley Contact information at EDIRC.
Bibliographic data for series maintained by Lisa Schiff ().