Citizen Participation in Pollution Permit Markets

25 Pages Posted: 8 Sep 2004

See all articles by David A. Malueg

David A. Malueg

University of California Riverside

Andrew Yates

University of North Carolina (UNC) at Chapel Hill - Department of Economics

Date Written: August 30, 2004

Abstract

Should citizens lobby the government to reduce pollution permit endowments or should they participate directly in the market by purchasing and retiring permits? We address this question in a two-stage model. In the first stage firms and citizens exert effort to influence the endowment of permits. In the second stage firms, and perhaps citizens, participate in the permit market. Even when citizens choose not to purchase permits, the possibility of doing so may affect the equilibrium. In our basic model, citizens choose not to purchase permits; relaxing any of three assumptions can reverse this result.

Keywords: Pollution permits, premit retirement, rent seeking

JEL Classification: D72, Q58

Suggested Citation

Malueg, David A. and Yates, Andrew, Citizen Participation in Pollution Permit Markets (August 30, 2004). Available at SSRN: https://ssrn.com/abstract=586465 or http://dx.doi.org/10.2139/ssrn.586465

David A. Malueg (Contact Author)

University of California Riverside ( email )

Economics Department
3136 Sproul Hall
Riverside, CA 92505
United States
951 827 1494 (Phone)

Andrew Yates

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

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