Marketable permits, market power, and cheating

Article Abstract:

A model of a noncompliant firm functioning in a marketable pollution permit market is presented. The main finding of this study shows that the probability that a firm with market power will cheat becomes lower as its endowment of permits from a fixed stock of permits becomes larger. On the other hand, the competitive fringe will cheat more as its permit endowments become smaller, thereby resulting in an ambiguous global impact on cheating. The initial allocation of permits is important in ascertaining the performance of pollution permit markets when firms feel that they have market power.

Business enterprises, Market share

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EPA's new emissions trading mechanism: a laboratory evaluation

Article Abstract:

The EPA has formed a new call auction institution for trading sulfur-dioxide emission allowances. Twelve laboratory markets conducted an investigation comparing the new call auction with the uniform price call auction. Results showed that the uniform price call auction is more efficient, generates more accurate measures of underlying values and costs, gives more reliable price information and is more sensitive to changes in underlying market conditions than the new call auction.

Sulfur dioxide

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Sellers' hedging incentives at EPA's emission trading auction

Article Abstract:

Research is presented concerning the tactics which were used by sellers' during the Environmental Protection Agency's trading auction for sulfur emissions. The hedging tactics used by sellers who can also bid are discussed.

Air, water, & solid waste management, Environmental Protection Agency, Auctions, Sulfur

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