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Pollution permit systems and form dynamics: how does the allocation scheme matter?

I use a firm dynamics model to compare two permit allocation schemes commonly used in pollution permit systems. In the first, closing plants keep their permits, and new entrants do not get them, whereas in the second, closing plants lose their permits, and new entrants get free allowances. Calibrating the model with data from power plants participating in the U.S. math formula program, I find that, compared to the first scheme, in the second arrangement, (i) plants stay, on average, 3.6 years longer and (ii) although the aggregate emission rate is lower, the plant distribution displays more dirty and low-productivity plants.

Información de la Publicación

Autores

Evangelina DardatiUniversidad Alberto HurtadoFacultad de Economía y NegociosEconomía y Negocios.

Facultad
Revista International Economic Review
Año 2016
Mes Diciembre
Número 1
Páginas 305-328
URL de la publicación http://onlinelibrary.wiley.com/doi/10.1111/iere.12157/full