Trading Quasi-Emission Permits

41 Pages Posted: 16 Jan 2003

See all articles by Juan-Pablo Montero

Juan-Pablo Montero

Massachusetts Institute of Technology (MIT) - Center for Energy and Environmental Policy Research (CEEPR); Pontifical Catholic University of Chile - Institute of Economics

Date Written: January 31, 2002

Abstract

I study the design of environmental policies for a regulator that has incomplete information on firms' emissions and costs of production and abatement (e.g., air pollution in cities with numerous small polluting sources). Because of incomplete information on emissions, there is no policy that can implement the first-best. Since the regulator can observe firms' abatement technologies, however, it is possible to design a quasi-emissions trading program based on this information and show that it can provide higher welfare than command-and-control regulation such as technology or emission standards. I then empirically examine this claim using evidence from a particulate quasi-emissions trading program in Santiago, Chile.

Suggested Citation

Montero, Juan-Pablo, Trading Quasi-Emission Permits (January 31, 2002). Available at SSRN: https://ssrn.com/abstract=361720 or http://dx.doi.org/10.2139/ssrn.361720

Juan-Pablo Montero (Contact Author)

Massachusetts Institute of Technology (MIT) - Center for Energy and Environmental Policy Research (CEEPR) ( email )

One Amherst Street, E40-279
Cambridge, MA 02142
United States
+56 2 686 4322 (Phone)
+56 2 686 6472 (Fax)

HOME PAGE: http://www.mit.edu/people/jpmonter

Pontifical Catholic University of Chile - Institute of Economics ( email )

Vicuna Mackenna 4860
Santiago
Chile
+56 2 686 4322 (Phone)
+56 2 686 6472 (Fax)

HOME PAGE: http://www.mit.edu/people/jpmonter

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