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 Publicación

Autores:

Evangelina Dardati

Institución: Universidad Alberto Hurtado
Facultad: Economía y Negocios
Unidad: Economía y Negocios

Revista:

International Economic Review

Año:

2016

Mes:

Diciembre

Número:

1

Páginas:

305-328

Url de Publicación:

http://onlinelibrary.wiley.com/doi/10.1111/iere.12157/full.