Efficiency Costs of Social Objectives in Tradable Permit Programs

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Objectives of tradable permit programs are often broader than internalizing an externality and improving economic efficiency. Many programs are designed to accommodate community, cultural, and other non-efficiency goals through restrictions on trading. However, restrictions can decrease economic efficiency gains. We use a policy experiment from the Alaska halibut and sablefish tradable permit program, which includes both restricted and unrestricted permits, to develop one of the few empirical measurements of the costs of meeting non-efficiency goals.

Fisheries, Policy Design

Estándares vs. Sistemas de Permisos Transables con Costos de Fiscalización: Una aplicación al caso de fuentes fijas en Bogotá, Colombia

Submitted by NENRE Concepcion on

We study the cost effectiveness property of different control strategies for improving environmental quality. Our prospective analysis considers the application of Transferable Emissions Permit System (TEPS), Transferable Ambient Permit System (TAPS) and Standards (STD) applied on fix sources in Bogota-Colombia. A numerical simulation model allowed us to obtain costs of each regulatory system, which were compared with associated urban environmental quality. The results show that the most cost effective regulation for any environmental quality goal is TEPS, followed by TAPS and finally STD.

Policy Design

Taxes, permits and costly policy response to technological change

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In this paper, we analyze the effects of the choice of price (taxes) versus quantity (tradable permits) instruments on the policy response to technological change. We show that if policy responses incur transactional and political adjustment costs, environmental targets are less likely to be adjusted under tradable permits than under emission taxes. This implies that the total level of abatement over time might remain unchanged under tradable permits while it will increase under emission taxes.

 

Climate Change, Policy Design

The Cost-Effective Choice of Policy Instruments to Cap Aggregate Emissions with Costly Enforcement

Submitted by NENRE Concepcion on

We study the cost-effectiveness of inducing compliance in a program that caps aggregate emissions of a given pollutant from a set of heterogeneous firms based on emissions standards and the relative cost-effectiveness of such a program with respect to an optimally designed program based on tradable discharge permits. Our analysis considers abatement, monitoring and sanctioning costs, as well as perfect and imperfect information on the part of the regulator with regard to the polluters’ abatement costs.

Policy Design

Should we tax or let firms trade emissions? An experimental analysis with policy implications for developing countries

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In this paper we use laboratory experiments to test the theoretical predictions derived by Villegas-Palacio and Coria (2010) about the effects of the interaction between technology adoption and incomplete enforcement. They show that under Tradable Emissions Permits (TEPs), and in contrast to taxes, the fall in permit price produced by adoption of environmentally friendly technologies reduces the benefits of violating the environmental regulation at the margin and leads firms to improve their compliance behavior.

Climate Change, Policy Design

Taxes, Permits, and the Adoption of Abatement Technology under Imperfect Compliance

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This paper analyzes the effects of the interaction between technology adoption and incomplete enforcement on the extent of violations and the rate of abatement technology adoption.

Policy Design

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

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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.

 

Policy Design

Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile

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Santiago was one of the first cities outside the OECD to implement a tradable permit program to control air pollution. This paper looks closely at the program’s performance over the past 10 years, stressing its similarities and discrepancies with trading programs in developed countries, and analyzing how it has reacted to regulatory adjustments and market shocks. Studying Santiago’s experience allows us to discuss the drawbacks and advantages of applying tradable permits in less developed countries.

 

Policy Design, Carbon Pricing

The Progress of GHG Markets: Opportunities and Risks

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The Effect of Temporal Closures and Individual Quotas on Fishing Trip Duration: A Hazard Function Analysis

Submitted by NENRE Concepcion on

In this article, we assess the effect that two different fishery management regimes have on the duration of the fishing trip. A basic theoretical model predicts that trip duration should increase with temporal closures and decrease with an individual quota system. Therefore, we propose and apply an empirical trip duration model.

Fisheries