The Feasibility of Marketable Emissions Permits in the United States

  • Roger G. Noll


In the decade of the 1970s, the United States Government vigorously pursued a policy to reduce substantially the pollution of the nation’s air and water. Beginning with the Clean Air Act in 1963, a series of laws were passed which expanded the role of the federal government in setting and enforcing environmental policy goals, set substantially more ambitious goals in terms of the purity of air and water, and increased dramatically the resources available for writing and enforcing pollution regulations. Although all the returns are not in and considerable disagreement about the exact figures remains, a reasonable estimate of the cost of environmental regulation is in the range of thirty to fifty billion dollars annually. In some industries, such as chemicals, electric power generation and mining, the cost of compliance with environmental regulation accounts for as much as ten per cent of investment expenditures, and five per cent of annual sales.2


Permit Price Emission Permit Abatement Technology Initial Allocation Permit Market 
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Notes and References

  1. 4.
    For a detailed study of this issue, see Lester B. Lave and Eugene P. Seskin, Air Pollution and Human Health (Baltimore: Johns Hopkins University Press for Resources for the Future, 1977).Google Scholar
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    For a more complete discussion of the nature of the regulatory process and how process affects policy, see Roger G. Noll, ‘Breaking Out of the Regulatory Dilemma: Alternatives to the Sterile Choice’, Indiana Law Journal, vol. 51, (1976) no. 3, pp. 686–99.Google Scholar
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    For a more complete discussion of the problems of the present regulatory system, see Allen V. Kneese and Charles L. Schultze, Pollution, Prices and Public Policy (Washington DC: The Brookings Institution, 1975).Google Scholar
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    See Bruce A. Ackerman and William T. Hassler, Clean Coal/Dirty Air (New Haven: Yale University Press, 1981).Google Scholar
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    For a well-documented sample, see Richard E. Ayers, ‘Enforcement of Air Pollution Controls on Stationary Sources under the Clean Air Act Amendments of 1970’, Ecology Law Quarterly, vol. 4(1975), no. 3, pp. 441–78.Google Scholar
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    For descriptions of European regulatory systems with contrasts to the American process, see Blair T. Bower, ‘Mixed Implementation Incentive Systems for Water Quality Management in France, the Ruhr and the United States,’ Conference on International Comparisons of the Implementation Process in Environmental Regulation, March 1981; and Steven Kelman, Regulating America, Regulating Sweden (Cambridge, Mass: MIT Press, 1981).Google Scholar
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    See J. H. Dales, Pollution, Property and Prices (Toronto: University of Toronto Press, 1968);Google Scholar
  8. W. David Montgomery, ‘Markets in Licenses and Efficient Pollution Control Programs’, Journal of Economic Theory, vol. 5 (1972), pp. 395–418; andCrossRefGoogle Scholar
  9. Thomas H. Teitenberg, ‘Transferable Discharge Permits and the Control of Stationary Source Air Pollution: A Survey and Synthesis’, Land Economics, vol. 56 (1980), pp. 391–416.CrossRefGoogle Scholar
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    For a more complete treatment of this subject, see A. Michael Spence and Martin L. Weitzman, ‘Regulatory Strategies for Pollution Control’, in Anne F. Friedlander (ed.), Approaches to Controlling Air Pollution (Cambridge, Mass: MIT Press, 1978); and Marc J. Roberts andGoogle Scholar
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    For a comparison of the effects of taxes and bounties on entry, see R. Talbot Page, ‘Failure of Bribes and Standards for Pollution Abatement’, Natural Resources Journal, vol. 13 (1976), pp. 677–704.Google Scholar
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    For a complete analysis of this problem, see Robert W. Hahn, ‘An Assessment of the Viability of Marketable Permits’, Doctoral dissertation, California Institute of Technology, May 1981.Google Scholar
  14. 14.
    For a more complete discussion and description of the cost data, see Robert W. Hahn, ‘Data Base and Programming Methodology for Marketable Permits Study’, Open File Report 80–8, Environmental Quality Laboratory, California Institute of Technology, 1981.Google Scholar
  15. For a detailed description of the model, see Glen R. Cass, ‘Methods for Sulfate Air Quality Management with Applications to Los Angeles’, Doctoral dissertation, California Institute of Technology, December 1977; andGoogle Scholar
  16. Glen R. Cass, ‘Sulfate Air Quality Control Strategy Design’, Atmospheric Environment, vol. 15, no. 7, p. 1227.CrossRefGoogle Scholar
  17. 16.
    For more details about the choice of emissions limits and the various simulations, see Robert W. Hahn and Roger G. Noll, ‘Designing a Market for Tradable Emissions Permits’, in Wesley Mogat (ed.), Reform of Environmental Regulation (Cambridge, Mass.: Ballinger, 1982).Google Scholar

Copyright information

© Jörg Finsinger 1983

Authors and Affiliations

  • Roger G. Noll

There are no affiliations available

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