Strategic trade in pollution permits

Alex Dickson, Ian A. MacKenzie

Research output: Contribution to journalArticle

65 Citations (Scopus)
19 Downloads (Pure)

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.
Original languageEnglish
Pages (from-to)94-113
Number of pages20
JournalJournal of Environmental Economics and Management
Volume87
Early online date27 May 2017
DOIs
Publication statusPublished - 31 Jan 2018

Keywords

  • pollution market
  • market power
  • strategic market game

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  • Research Output

    • 65 Citations
    • 1 Working paper

    Strategic trade in pollution permits

    Dickson, A. & MacKenzie, I. A., 29 Jan 2016, Glasgow, 27 p.

    Research output: Working paper

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