Transaction Costs and Tradable Permit Markets: The United States Lead Phasedown

34 Pages Posted: 12 Jan 2008

See all articles by Suzi Kerr

Suzi Kerr

Motu Economic and Public Policy Research Trust

David C. Maré

Motu Economic and Public Policy Research Trust; University of Waikato - Economics

Date Written: June 30, 1998

Abstract

We econometrically estimate the effect of transaction costs on the cost-effectiveness of the tradable permit market created during the US lead phasedown. We develop a methodology to identify transaction costs in the absence of price data. We find that refineries generally trade efficiently. We also, however, find evidence that transaction costs affect trading. We find evidence that refineries are less likely to trade in cases where theory suggests they will face high transaction costs. The data were collected from 30 major oil companies and include the trading partners and quantities traded for all permit trades carried out by each of 87 refineries over 8 quarters.

Suggested Citation

Kerr, Suzi and Maré, David C., Transaction Costs and Tradable Permit Markets: The United States Lead Phasedown (June 30, 1998). Available at SSRN: https://ssrn.com/abstract=1082596 or http://dx.doi.org/10.2139/ssrn.1082596

Suzi Kerr (Contact Author)

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand
+64 4 383 4250 (Phone)
+64 4 383 4270 (Fax)

David C. Maré

Motu Economic and Public Policy Research Trust ( email )

PO Box 24390
Wellington, 6021
New Zealand
64-4-9394250 (Phone)

HOME PAGE: http://www.motu.org.nz

University of Waikato - Economics

New Zealand

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