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Tradable Permits vs Ecological Dumping AgEcon
Antoniou, Fabio; Hatzipanayotou, Panos; Koundouri, Phoebe.
In this paper we examine an alternative policy scenario, where governments allow polluting firms to trade permits in a strategic environmental policy model. We demonstrate, among other things, that with no market power in the permits market, governments of the exporting firms do not have an incentive to under-regulate pollution in order to become more competitive. This strategic effect is reversed and leads to a welfare level closer to the cooperative one and strictly higher to that when permits are non-tradable. Allowing for market power in the permits market, the incentive to under-regulate pollution re-appears regardless of whether permits are tradable or not. With tradable permits, however, the incentive to under-regulate pollution is comparatively...
Tipo: Working or Discussion Paper Palavras-chave: Strategic Environmental Policy; Tradable Permits; Race to the top; Environmental Economics and Policy; Q58; F12; F18.
Ano: 2010 URL: http://purl.umn.edu/59374
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