1. Strategic trade in pollution permits.
- Author
-
Dickson, Alex and MacKenzie, Ian A.
- Subjects
- *
EMISSIONS trading , *STRATEGIC business units , *ECONOMIC competition , *ECONOMIC equilibrium , *MARKET design & structure (Economics) - 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. [ABSTRACT FROM AUTHOR]
- Published
- 2018
- Full Text
- View/download PDF