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Full-Text Articles in Social and Behavioral Sciences
Direct And Market Effects Of Enforcing Emissions Trading Programs: An Experimental Analysis, James J. Murphy, John K. Stranlund
Direct And Market Effects Of Enforcing Emissions Trading Programs: An Experimental Analysis, James J. Murphy, John K. Stranlund
PERI Working Papers
Since firms in an emissions trading program are linked together through a permit market, so too are their compliance choices. Thus, enforcement strategies for trading programs must account for not only the direct effects of enforcement on compliance and emissions decisions, but also the indirect effects that occur because changes in enforcement can induce changes in permit prices. This paper uses laboratory experiments to test for these direct and indirect market effects. Consistent with theoretical predictions, we find a direct effect of enforcement on individual violations, as well as a countervailing market effect through the permit price. Thus, the productivity …
Enforcing Transferable Permit Systems In The Presence Of Transaction Costs, Carlos A. Chavez, John K. Stranlund
Enforcing Transferable Permit Systems In The Presence Of Transaction Costs, Carlos A. Chavez, John K. Stranlund
PERI Working Papers
In this paper we examine the impacts of transaction costs on enforcing a transferable emissions permit system. We derive an enforcement strategy with a self-reporting requirement that achieves complete compliance in a cost-effective manner. In the absence of transaction costs targeted enforcement—the practice of monitoring some firms more closely than others—is neither necessary nor desirable. In the presence of constant marginal transaction costs, buyers of permits should be monitored more closely than sellers, but within groups of buyers and sellers monitoring should be uniform. When marginal transaction costs are not constant, effective monitoring will depend on whether a firm is …