Citizen's participation in permit markets and social welfare under uncertainty

Olivier Rousse and Benoît Sévi

Post-Print from HAL

Abstract: There are now a number of small or medium-scale experiments where individuals can actively participate in permit markets. Where individuals retain permits, the remaining quota for polluting firms is decreased thereby theoretically increasing global welfare. This result lies on two major hypothesis: first, citizens have rational expectations and, second, they are risk-neutral. In this article, we provide theoretical arguments about the potential welfare-decreasing impact of citizen's participation when at least one of these assumptions is violated. Importantly, our conclusions lead, in some particular cases, to recommend a limited participation of individuals in permit schemes while encouraging a better diffusion of information toward this class of potential participants. This is the case, for instance, when scientific uncertainty about a phenomenon is strong and citizens cannot estimate the marginal abatement cost with confidence.

Keywords: Uncertainty; Marginal abatement cost (MAC) curves; Prices versus quantities; Citizen participation; Behavioral economics; Emissions trading; Risk aversion (search for similar items in EconPapers)
Date: 2013-03
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Published in Environmental Science & Policy, 2013, 27, pp.215-222. ⟨10.1016/j.envsci.2012.11.016⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:hal:journl:halshs-00814000

DOI: 10.1016/j.envsci.2012.11.016

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().