Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile

Abstract

Santiago was one of the first cities outside the OECD to implement a tradable permit program to control air pollution. This paper looks closely at the program's performance over the past ten years, stressing its similarities and discrepancies with trading programs implemented in developed countries, and analyzing how it has reacted to regulatory adjustments and market shocks. Studying Santiago's experience allows us to discuss the drawbacks and advantages of applying tradable permits in less developed countries.

Keywords: air pollution, environmental policy, tradable permits, developing countries

JEL Classification: Q53, Q58