Strategic trade in pollution permits

Alex Dickson, Ian A. MacKenzie

Research output: Contribution to journalArticle

46 Citations (Scopus)

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
Pages94-113
Number of pages20
JournalJournal of Environmental Economics and Management
Volume87
Early online date27 May 2017
DOIs
Publication statusPublished - 31 Jan 2018

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, Alex; MacKenzie, Ian A.

In: Journal of Environmental Economics and Management, Vol. 87, 31.01.2018, p. 94-113.

Research output: Contribution to journalArticle

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