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| Rabotyagov, Sergey S.; Feng, Hongli; Kling, Catherine L.. |
| The optimal pollution permit trading system is examined when the regulator, faced with incomplete information on firms' abatement costs and delivery coefficients, seeks to minimize expected total abatement costs to meet an ex ante pollution target. Intuitively, we find that the optimal trading ratio and permit cap are set such that there will be more pollution when abatement costs are high and less pollution when abatement costs are low. Surprisingly however , even when the delivery coefficients are known with certainty, the optimal trading ratio will not necessarily equal the delivery coefficient, nor will it be optimal for the total permit quantity to equal the given pollution target. Instead, the trading ratio will tend to be larger when there is... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Delivery coefficient; Ex ante pollution target; Ex post pollution target; Permit trading; Total permit cap; Trading ratio; Environmental Economics and Policy. |
| Ano: 2006 |
URL: http://purl.umn.edu/21312 |
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