Marketable Permits, Market Power, and Cheating

Egteren, Henry van; Weber, Marian

doi:10.1006/jeem.1996.0011

Cited by 98 publications

(54 citation statements)

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“…In fact, permit sellers did hold on to more permits than expected, and equilibrium permit prices were usually higher than expected. Conceptually, firms with market power that sell permits will tend to have lower violations than firms that buy permits (van Egteren and Weber [34]; Malik [23]; Chávez and Stranlund [9]). The problem with this explanation is that if market power explains the difference between the compliance choices of sellers and permits, we should also observe evidence of market power in our perfect compliance…”

Section: The Initial Allocation Effect On Individual Violationsmentioning

confidence: 99%

A Laboratory Investigation of Compliance Behavior under Tradable Emissions Rights: Implications for Targeted Enforcement

Murphy

Stranlund

2005

SSRN Journal

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This paper uses laboratory experiments to test theoretical predictions concerning compliance behavior in competitive emissions trading programs. We test the hypotheses that both the violations of competitive risk neutral firms and the marginal effectiveness of increased enforcement across firms are independent of differences in their benefits from emissions (abatement costs) and their initial permit allocations. This conclusion suggests that regulators have no conceptual justification for targeting their enforcement effort based on firm-level characteristics. Consistent with theory, we find that violations were independent of parametric differences in emissions benefits. However, subjects who were predicted to buy permits tended to have higher violation levels than those who were predicted to be sellers. Nevertheless, we find no evidence that the marginal effectiveness of enforcement depends on any firm-specific characteristic. We also examine the determinants of compliance behavior under fixed emissions standards. As expected, we find significant differences between compliance behavior under fixed standards and emissions trading programs.

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Section: The Initial Allocation Effect On Individual Violationsmentioning

confidence: 99%

A Laboratory Investigation of Compliance Behavior under Tradable Emissions Rights: Implications for Targeted Enforcement

Murphy

Stranlund

2005

SSRN Journal

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“…The analysis of the dynamic system (27) and (28) can be used to determine the long-run ES compliance and pollution stock (z * , S * ) . Then the long-run ES participation in the VA will be determined as h (z * , S * ) .…”

Section: Replicator Dynamicsmentioning

confidence: 99%

“…23 In the enforcement literature, variable monitoring effort is usually related to firm specific variables (e.g. Malik, 1990;VanEgteren and Weber, 1996). 24 Grieson and Singh (1990), Khalil (1997), andFranckx (2002) analyze no commitment frameworks.…”

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confidence: 99%

Participation in and Compliance with Public Voluntary Environmental Programs: An Evolutionary Approach

Xepapadeas

Passa

2004

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Participation in and Compliance with Public Voluntary Environmental Programs: An Evolutionary Approach SummaryThe joint evolution of participating and complying firms in a public VA, along with the evolution of the pollution stock is examined. Replicator dynamics modeling participation and compliance are combined with pollution stock dynamics. Fast-slow selection dynamics are used to capture the fact that decisions to participate in and further comply with the public VA evolve in different time scales. Evolutionary stable (ES) equilibria depend on the structure of the legislation and auditing probability. Partial participation and partial compliance can be ES equilibria, with possible multiplicities, in addition to the monomorphic equilibria of full (non) compliance. Convergence to these equilibria could be monotonic or oscillating. Full participation and compliance can be attained if the regulator is pre-committed to certain legislation and inspection probabilities, or by appropriate choices of the legislatively set emission level and the non-compliance fine.

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“…1 As noted above, Van Egteren and Weber (1996) explore trading programs and noncompliance. However, the main thrust of their paper is the extent to which market power and noncompliance interact and how permit endowments may be catered to remedy this issue.…”

Section: Theoretical Modelmentioning

confidence: 99%

“…The performance and appropriateness of these policies for NPS pollution, however, continue to be challenged for a number of reasons-e.g., noncompliance (Malik, 1990), market power (Van Egteren and Weber, 1996), transactions costs (Stavins, 1995), uncertainty (Taff and Senjem, 1996), and trading ratios (Hoag and Hughes-Popp, 1997).…”

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confidence: 99%

Watershed Nutrient Trading Under Asymmetric Information

Johansson

2002

Agric. resour. econ. rev.

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This study evaluates first-and second-best trading policies for regulating watershed phosphorus under asymmetric information. The trading policies are differentiated on the degree to which regulators observe point and nonpoint source abatement efforts. The efficiency losses attributable to these informational asymmetries and those of the second-best policies can be measured in social welfare, and provide regulators the shadow value of foregoing first-best measures. Given representative monitoring costs from national water monitoring programs, it is shown that under asymmetric information, the chosen second-best trading policies outperform first-best policies by 11% in the control of watershed nutrient pollution.

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Marketable Permits, Market Power, and Cheating

Cited by 98 publications

References 0 publications

A Laboratory Investigation of Compliance Behavior under Tradable Emissions Rights: Implications for Targeted Enforcement

A Laboratory Investigation of Compliance Behavior under Tradable Emissions Rights: Implications for Targeted Enforcement

Participation in and Compliance with Public Voluntary Environmental Programs: An Evolutionary Approach

Watershed Nutrient Trading Under Asymmetric Information

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