by Fabio Antoniou, Panos Hatzipanayotou, Phoebe Koundouri
- In this paper we examine an alternative policy scenario, where governments allow polluting firms to trade permits in a strategic environmental policy model. We demonstrate, among other things, that with no market power in the permits market, governments of the exporting firms do not have an incentive to under-regulate pollution in order to become more competitive. This strategic effect is reversed and leads to a welfare level closer to the cooperative one and strictly higher to that when permits are non-tradable.
Fabio Antoniou, Panos Hatzipanayotou, Phoebe Koundouri(2010). "Tradable Permits vs Ecological Dumping." FEEM Note di lavoro 2010.002, Jan 2010.