Abstract
Emission permit markets are often thin. The conditions for emission permit markets to yield efficient outcomes are therefore not automatically satisfied. This paper shows — using a principal-agent framework — how the regulatory agency (the principal) can induce price-taking behavior by the firms (the agents) in emission permit markets.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Bibliography
Abreu, D. and A. Sen (1991): “Virtual Implementation in Nash Equilibrium”, Econometrica, 59 (4): 997–1021.
Atkinson, S. and T. Tietenberg (1991): “Market Failure in Incentive-Based Regulation: The Case of Emissions Trading”, Journal of Environmental Economics and Management,21(1):17–31.
Hahn, R.W. (1989): “Economic Prescriptions for Environmental Problems”, Journal of Economic Perspectives, 3 (2): 95–114.
Hahn, R.W. and R.G. Noll (1982): “Designing a Market for Tradeable Emissions Permits”, pp. 119–146 in Magat, W.A. (ed.)Reform of Environmental Regulation, Ballinger Publishing Company, Cambridge, MA.
Hurwicz, L. (1959): “Optimality and Informational Efficiency in Resource Allocation Processes”, pp. 27–46 in Arrow, K.J., S. Karlin and P. Suppes (eds.) Mathematical Methods in the Social Sciences, Stanford University Press, Paolo Alto, CA.
Hurwicz, L. (1972): “On Informationally Decentralized Systems”, pp. 297–336 in McGuire, C.B. and R. Radner (eds.) Decisions and Organizations, North-Holland, Amsterdam, The Netherlands.
Hurwicz, L. (1973): The Design of Mechanisms for Resource Allocation“, American Economic Review, 63(1)1–30.
Johansen, L. (1972): Production Functions, North-Holland Publishing Company, Amsterdam, The Netherlands.
Malik, A.S. (1990): “Markets for Pollution Control When Firms are Noncompliant”, Journal of Environmental Economics and Management, 18 (2): 97–106.
McFadden, D. (1978): “Duality of Production, Cost, and Production Functions”, pp. 1–109 in Fuss, M. and D. McFadden (eds.) Production Economics: A Dual Approach to Theory and Applications, Vol. 1., North-Holland, Amsterdam, The Netherlands.
Misiolek, W.S. and H.W. Elder (1989): “Exclusionary Manipulation of Markets for Pollution Rights”, Journal of Environmental Economics and Management, 16: 156–166.
Morch von der Fehr, N-H (1993): “Tradeable Emission Rights and Strategic Interaction”, Environmental and Resource Economics, 3: 129–151.
Randall, A. (1983): “The Problem of Market Failure”, Natural Resources Journal, 23 (1): 131–148.
Roberts, M.J. (1982): “Some Problems of Implementing Marketable Pollution Rights Schemes: The Case of the Clean Air Act”, pp. 92–118 in Magat, W.A. (ed.) Reform of Environmental Regulation, Ballinger Publishing Company, Cambridge, MA.
Romstad, E. and O. Bergland (1990): Principles for Obtaining Optimal Emission Levels When Abatement Costs Are Private Information,Oregon State Graduate Faculty Working Paper No. 90–103.
Romstad, E. and O. Bergland (1993): “Inducing Individual Firm Compliance to Emission Quotas When Abatement Costs are Private Knowledge”, paper presented at the Fourth EAERE Conference, Fontainebleu, France, June 30 - July 3, 1993.
Russell, C.S. (1987): “Game Theory Lessons for Structuring Monitoring and Enforcement Systems”, paper presented at the Association of Environmental and Resource Economists’ Workshop on Environmental Monitoring and Enforcement: Theory and Practice, Newark, Delaware, August 13–14, 1987.
Russell, C.S. (1990): “Game Models for Structuring Monitoring and Enforcement Systems”, Natural Resources Modelling, 4 (2): 143–173.
Russell, C.S., W. Harrington and W. J. Vaughan (1986): Enforcing Pollution Control Laws, Resources for the Future, Washington D.C.
Spulber, D.F. (1989): Regulation and Markets, MIT Press, Cambridge, MA.
Xepapadeas, A.P. (1991): “Environmental Policy under Imperfect Information: Incentives and Moral Hazard”, Journal of Environmental Economics and Management, 20(2)113–126.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 1997 Springer Science+Business Media Dordrecht
About this chapter
Cite this chapter
Romstad, E., Bergland, O. (1997). Manipulation of Emission Permit Markets. In: Nau, R., Grønn, E., Machina, M., Bergland, O. (eds) Economic and Environmental Risk and Uncertainty. Theory and Decision Library, vol 35. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-1360-3_5
Download citation
DOI: https://doi.org/10.1007/978-94-017-1360-3_5
Publisher Name: Springer, Dordrecht
Print ISBN: 978-90-481-4849-3
Online ISBN: 978-94-017-1360-3
eBook Packages: Springer Book Archive