Strategic trade in pollution permits

Alexander Dickson, Ian A. MacKenzie

Research output: Working paper

6 Citations (Scopus)
31 Downloads (Pure)

Abstract

Markets for pollution have become a popular regulatory instrument. Yet these markets are often highly concentrated, which may lead to strategic behavior by all participants. In this article we investigate the implications of strategic trade in pollution permits. The permit market is developed as a strategic market game, where all firms are allowed to behave strategically and their roles as buyers or sellers of permits are determined endogenously with price-mediated trade. In a second stage, firms transact on a product market and we allow for a variety of market structures. Our framework establishes the endogenous determination of equilibrium price, market structure, and levels of exchange in the permit market.
Original languageEnglish
Place of PublicationGlasgow
Number of pages27
Volume16-02
Publication statusPublished - 29 Jan 2016

Keywords

  • pollution market
  • market power
  • strategic market game

Fingerprint Dive into the research topics of 'Strategic trade in pollution permits'. Together they form a unique fingerprint.

65 Citations (Scopus)
19 Downloads (Pure)

Cite this