Efficiency Costs of Social Objectives in Tradable Permit Programs

Kailin Kroetz, James Sanchirico () and Daniel K. Lew

RFF Working Paper Series from Resources for the Future

Abstract: Objectives of tradable permit programs are often broader than internalizing an externality and improving economic efficiency. Many programs are designed to accommodate community, cultural, and other non-efficiency goals through restrictions on trading. However, restrictions can decrease economic efficiency gains. We use a policy experiment from the Alaska halibut and sablefish tradable permit program, which includes both restricted and unrestricted permits, to develop one of the few empirical measurements of the costs of meeting non-efficiency goals. We estimate that restrictions are reducing resource rent in the halibut and sablefish fisheries by 25% and 9%, respectively.

Keywords: tradable permits; created markets; individual transferrable quota; catch shares; Alaskan halibut and sablefish fishery (search for similar items in EconPapers)
JEL-codes: Q22 Q28 (search for similar items in EconPapers)
Date: 2015-03-25
New Economics Papers: this item is included in nep-env
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Citations: View citations in EconPapers (15)

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Journal Article: Efficiency Costs of Social Objectives in Tradable Permit Programs (2015)
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