To trade or Not to Trade: A Firm-Level Analysis of Emissions Trading in Santiago, Chile

The authors surveyed firms participating in emissions trading programs in Santiago, Chile, to explore further whether tradable permits are appropriate for transition and developing economies. Their survey information revealed serious implementation and design flaws in Chile’s trading, but they are not more severe than the EU or U.S. systems. Countries with similar income levels and institutional maturity as Chile should be able to develop well-functioning permit trading schemes.