The Dynamics of Pollution Permits

Resources for the Future Discussion Paper 15-20

27 Pages Posted: 26 Jun 2015

See all articles by Makoto Hasegawa

Makoto Hasegawa

Graduate School of Economics, Kyoto University

Stephen W. Salant

University of Michigan; Resources for the Future

Multiple version iconThere are 2 versions of this paper

Date Written: May 14, 2015

Abstract

We review the literature on bankable emission permits which has developed over the last two decades. Most articles analyze either theoretical or simulation models. The theoretical literature considers the problem of minimizing the discounted sum of social costs and the possibility of decentralizing the solution through competitive permit markets. In some cases, authors do not explicitly consider pollution damages but instead assume that the planner's goal is to minimize the discounted social cost of reducing cumulative emissions by a given amount. In other cases, authors do not explicitly consider an emissions reduction target but assume that the goal is to minimize the discounted sum of pollution damages and abatement costs. Simulations permit evaluation of alternative government policies under uncertainty. We conclude by pointing out directions for future work.

Suggested Citation

Hasegawa, Makoto and Salant, Stephen W., The Dynamics of Pollution Permits (May 14, 2015). Resources for the Future Discussion Paper 15-20, Available at SSRN: https://ssrn.com/abstract=2622699 or http://dx.doi.org/10.2139/ssrn.2622699

Makoto Hasegawa

Graduate School of Economics, Kyoto University ( email )

Yoshida-Honmachi, Sakyo-ku
Kyoto, 606-8501
Japan

HOME PAGE: http://sites.google.com/view/makoto-hasegawa/

Stephen W. Salant (Contact Author)

University of Michigan ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
313-764-2370 (Phone)
313-764-2769 (Fax)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
42
Abstract Views
441
PlumX Metrics