Strategic trade in pollution permits

Alexander Dickson, Ian MacKenzie

Research output: Contribution to journalArticle

  • 19 Citations

Abstract

Markets for pollution have become a popular regulatory instrument. 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. We identify a unique equilibrium in permit exchange, investigate the properties of this equilibrium, and consider the effect of strategic behavior in the product market.
LanguageEnglish
Pages1-37
Number of pages37
JournalJournal of Environmental Economics and Management
Early online date27 May 2017
DOIs
StateE-pub ahead of print - 27 May 2017

Fingerprint

Pollution
pollution
market
Strategic trade
Pollution permits
Product market
Seller
Buyers
Strategic market games
Market structure
Strategic behavior
firm
product

Keywords

  • pollution market
  • market power
  • strategic market game

Cite this

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Strategic trade in pollution permits. / Dickson, Alexander; MacKenzie, Ian.

In: Journal of Environmental Economics and Management, 27.05.2017, p. 1-37.

Research output: Contribution to journalArticle

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