ethical influences on the evolution of the us tradable permit approach to air pollution control abstract in 1975 a novel approach to air pollution control was implemented in the usa from this rather humble beginning this approach has now been expanded rather dramatically in several different directions this paper describes this evolution shows how the design of the system has been adapted to accommodate ethical concerns and describes how the latest versions of this approach have transformed the regulatory process which spawned the approach in the first place

impacts of capital inflows on aggregate spending categories the case of turkey this paper discusses the impact of foreign savings on aggregate spending categories in turkey using the vector autoregressive var models the major finding is that foreign savings has an increasing effect on consumption the increase of investment arises from the accelerator effect of consumption which results in an upward trend in investment in non tradable sectors concluding that the policy of relying on foreign savings to obtain long term increases in tradable sector investment and competitiveness is ill judged

market failure in incentive based regulation the case of emissions trading abstract among the existing evaluations of the us epa s emissions trading program a consensus has emerged while the program has resulted in significant cost savings it has not even approximately achieved a cost effective allocation of the control responsibility the cost savings have been smaller and the trades fewer than might have been expected at the outset of the program in this article we explore one hypothesis which purports to explain the divergence between the cost minimizing and the observed pattern of trades for nonuniformly mixed pollutants the trading process hypothesis attributes some significant proportion of this divergence to the nature of the process by which emission reduction credits are traded under the bubble policy an examination of actual bubble trades reveals that the actual trading process is sequential and bilateral and hence differs considerably from the implicit process modeled in the existing empirical studies simulations of this more realistic trading process suggest that the resulting equilibria deviate considerably from cost effective allocations of the control responsibility

priority pollution rights adapting pollution control to a variable environment evidence suggests that a priority pollution rights system has much greater flexibility and makes more efficient use of privately held technological and cost information than alternative instruments of control in adapting pollutant discharge rates to variations in the assimilative capabilities of the environment possibilities of undesirable forms of strategic behavior in the market warrant further investigation but such possibilities exist under all instruments successful experience with priority water rights in the western united states bodes well for similar systems in the field of pollution control 13 references 1 figure

economic implications of emissions trading rules for local and regional pollutants in 1975 the united states environmental protection agency initiated an historic process of regulatory reform now known as the emissions trading program for nonuniformly mixed pollutants such as sulfur dioxides air quality is a function not only of the level of emissions but their location and stack heights as well the focus of this paper is how to protect local air quality and limit long range pollutant deposition caused by emission trades while allowing as much cost reducing trading activity as possible the authors examine the implications of two trading rules in two different airsheds using programming simulation models they find that the use of either trading rule represents a substantial improvement over relying exclusively on the current allocation of control responsibility

hyteresis in import prices the beachhead effect this paper shows that temporary real exchange rate fluctuations can have persistent hysteretic effects on trade specifically when market entry costs are sunk sufficiently large exchange rate shocks alter domestic market structure and thereby induce hysteresis this simple result has strong implications for exchange rate theory t rade policy and estimation of trade equations empirical evidence su ggests that the recent dollar overvaluation induced hysteresis in u s import prices namely the aggregate pass through equation of exchange rates to import prices shifted in the 1980s the shift s nature and timing is broadly consistent with the hysteresis hypothesis copyright 1988 by american economic association

trade offs in designing markets with multiple objectives abstract this paper explores some of the problems involved in designing markets with multiple objectives the first part of the paper considers the issue of how such markets are designed in theory while the second part reviews some evidence on actual applications in the field of air pollution control

the net benefits of incentive based regulation a case study of environmental standard setting economists interested in environmental safety and health regulation have long argued that decentralized incentive based or ib policies are more efficient than centralized command and control or cac approaches see charles schultze 1977 for instance these arguments generally have been based on the assumption that ib policies will accomplish the same goals as their cac counterparts but at less cost to society however some of those touting ib policies have overlooked an important point environmental workplace or even productsafety standards typically take the form of maximum permissible concentrations of harmful substances so that compliance only requires that all monitoring points or samples register readings below these critical levels for this reason ib policies typically assign a shadow price of zero to improvements that exceed the standard s while more crude cac policies generally result in overcontrol beyond the standards if there is no value to this overcontrol cac policies will not improve at all on ib approaches and will indeed be more expensive if however reduced concentrations below the level of the standards bring with them further improvements in health or the environment cac approaches will produce greater benefits than ib approaches thus a fair comparison between the two necessitates that any additional benefits associated with cac policies be offset against the cost advantages enjoyed by their ib counterparts although this possibility has been recognized by others scott atkinson and t h tietenberg 1982 for instance it is little appreciated and its empirical significance has never been ascertained that is our purpose here we do so by developing data on the costs and benefits of controlling a common air pollutant total suspended particulates or tsp in baltimore by comparing the tsp levels likely under both ib and cac approaches we are able to estimate the marginal costs and benefits associated with a variety of alternative air quality standards which take the form of maximum permissible concentrations this in turn allows us to determine the net benefits arising from the two kinds of regimes in the next section we present a simple conceptual framework for our analysis section ii describes the estimation of the costs and benefits of our hypothesized air pollution controls in baltimore section iii presents our somewhat surprising findings and section iv discusses those findings and their potential significance for regulation in the real world

a trading ratio system for trading water pollution discharge permits abstract the fact that water flows to the lowest level uni directionally is a very specific and useful property of water by utilizing this property we design a trading ratio system trs of tradable discharge permits for water pollution control such a trading ratio system has three main characteristics 1 the zonal effluent cap is set by taking into account the water pollutant loads transferred from the upstream zones 2 the trading ratios are set equal to the exogenous transfer coefficients among zones and 3 permits are freely tradable among dischargers according to the trading ratios this paper shows that the trs can take care of the location effect of a discharge and can achieve the predetermined standards of environmental quality at minimum aggregate abatement costs problems with hot spots and free riding can be avoided and the burdens on both dischargers and the environmental authority should be relatively light

regulatory constraints on environmental markets abstract there have been several recent regulatory reforms aimed at promoting economic efficiency these reforms fall into two broad categories those aimed at promoting competition in specific industries and those aimed at addressing problems that cut across several industries this analysis examines two reforms that fall into the latter category both of these policies are specifically designed to enhance environmental quality while promoting cost savings the analysis focuses on the biases and inefficiencies associated with the use of these policies the paper concludes with a discussion of the possibility of designing more efficient alternatives in light of the political constraints that are imposed on regulators

the value of scarce water measuring the inefficiency of municipal regulations abstract rather than allowing urban water prices to reflect scarcity rents during periods of drought induced excess demand policy makers have mandated command and control approaches primarily rationing the use of water outdoors while such policies are ubiquitous and likely inefficient economists have not had access to sufficient data to estimate their economic impact using unique panel data on residential end uses of water in 11 north american cities we examine the welfare implications of urban water rationing in response to drought using estimates of expected marginal prices that vary both across and within markets we estimate price elasticities specific to indoor and outdoor water use our results suggest that current policies do target water uses that households themselves are most willing to forgo nevertheless we find that rationing outdoor water in cities has costly welfare implications primarily due to household heterogeneity in willingness to pay for scarce water we find that replacing rationing policies with a market clearing drought price would result in welfare gains of more than 29 of what households in the sample spend each year on water

the tradable permits approach to protecting the commons lessons for climate change tradable permit approaches for rationing access to the commons have been applied to many different types of resources in many different countries this essay reviews the experience with three main applications of tradable permit systems air pollution control water supply and fisheries management as well as some unique related programmes the purpose of the review is to draw together what we have learned about tradable permits in practice that might offer some useful insights for the implementation of the three tradable permit mechanisms that are part of the kyoto protocol copyright 2003 oxford university press

costs of alternative policies for the control of nitrogen dioxide in baltimore abstract the costs of meeting alternative one hour nitrogen dioxide standards in baltimore are simulated for alternative pollution control policies applied to the 200 point sources with the largest emissions and compared to a similar study for the chicago area the least cost spatially differentiated policy is found to be quite closely approximated by an effluent fee varying only by source type and a policy that combines features of a regulatory and an economic incentive policy the uniform fee or its market permit analogue results in relatively high costs because of severe overcontrol

the empirical properties of two classes of designs for transferable discharge permit markets abstract previous work by atkinson and lewis j environ econ manag 1 237 250 1974 and anderson et al an analysis of alternative policies for attaining and maintaining a short term no2 standard mathtech inc princeton n j 1979 has indicated the tremendous cost advantages to be achieved by moving from a policy based on emission standards to one based on marketable emission permits as tietenberg land econ 56 391 416 1980 points out however neither of the major permit designs treated in the literature are optimal from all points of view this has triggered a search for alternative permit designs which while they may not minimize compliance costs have sufficient other virtues as to make them attractive on other grounds the purpose of this paper is to examine within the context of an empirical mathematical programming model the air quality emission and cost consequences of two classes of the permit designs which can be implemented in the absence of information on control costs this case study involves particulate control in st louis

a regulatory framework for a policy of sustainability lessons from the neo liberal school abstract in this paper targets institutions and policy measures for describing and implementing sustainable development are evaluated in terms of their conformity with the economic framework of a market system from the viewpoint of neo liberal economic thinking as conceived by the german freiburg school of economists a general set of criteria is developed it includes issues of operationalization and legitimation of goals as well as institutional and instrumental issues on this basis general rules for designing an ecological framework guaranteeing the greatest possible degree of conformity with a market system are derived the concrete application of these rules leads to recommendations for a policy of sustainability with respect to the setting of goals the establishment of institutions as well as the use of appropriate instruments

transitional restricted linkage between emissions trading schemes linkages between emissions trading systems are deemed an important element of the future climate policy landscape they are however difficult to agree and remain few and far between temporary restrictions on permit trading have potential to facilitate and gradually approach unrestricted full linkage we compare the relative merits of several link restrictions in this respect namely quantitative transfer limits border taxes on transfers exchange and discount rates and unilateral linkage to this end we develop a simple model to have a unifying framework which in conjunction with lessons we draw from real world experiences serves as a basis for a broader policy oriented discussion while quantitative restrictions seem to be the natural route to full linkage they can lead to uncertain distributional effects and weaken price signals these aspects are mitigated under a border permit tax but this policy seems harder to implement exchange rates have potential to adjust for programmes stringencies and raise ambition over time but can be challenging to select as experience corroborates unilateral linkage can be a convenient approach

markets for tradeable emission and ambient permits a dynamic approach this paper discusses trade mechanisms in pollutionpermit markets proofs are given that sequential bilateral trade in tradeable emissions permitsconverges to a market equilibrium with minimal totalcosts of pollution control if ambient or depositionpermits are traded the convergence of bilateraltransactions occurs only in the case of a singlereceptor for multiple receptors the proof ofconvergence for tradeable emissions and ambientpermits is given for two trade mechanisms sequential multilateral trade and a walrasian auction

technology adoption under time differentiated market based instruments for pollution control abstract peak concentrations of ground level ozone pose health risks to millions of u s citizens across the u s in order to reduce peak ozone concentrations nitrogen oxide nox emissions from the power sector among others have been regulated with technology based standards or more commonly in recent years market based instruments such as cap and trade programs however the lack of temporal flexibility in current designs of these market based instruments limits their cost effectiveness on days forecasted to have the highest levels of pollution including ozone precursors such as nox and as further emission reductions are sought the marginal cost of these approaches increases dramatically in this paper we compare three regulatory schemes for reducing nox emissions on high ozone days time differentiated pricing which prices nox emissions only on days with high ozone concentrations undifferentiated pricing which represents current nox emission regulations and technology based standards we develop a novel model that captures for the first time both the short and long term response of generators through redispatching and control technology adoption to a dynamic pricing scheme such as time differentiated pricing unlike prior studies on time differentiated pricing the heart of our model a unit commitment model accounts for inter temporal constraints on power generation that may be crucial to accurately capturing the response of generators to a transient price signal we apply this model to the texas power system and find that while control technology adoption specifically selective catalytic reduction does occur at very high time differentiated prices time differentiated pricing mainly affects emissions and costs through redispatching of gas for coal fired generation furthermore we show that time differentiated pricing due to its targeted pricing mechanism provides a more cost effective approach than undifferentiated pricing or technology based standards for reducing nox emissions on high ozone days but is not cost effective at reducing summer wide nox emissions our results illustrate the trade offs between these regulatory approaches and suggest that states should consider dynamic pricing schemes such as time differentiated pricing for achieving further reductions in peak ozone concentrations

sequential nonzero sum blotto allocating defensive resources prior to attack abstract the strategic allocation of resources across multiple fronts has long been studied in the context of blotto games in which two players simultaneously select their allocations however many allocation problems are sequential for example a state trying to defend against a terrorist attack generally allocates some or all of its resources before the attacker decides where to strike this paper studies the allocation problem confronting a defender who must decide how to distribute limited resources across multiple sites before an attacker chooses where to strike unlike many blotto games which only have very complicated mixed strategy equilibria the sequential nonzero sum blotto game always has a very simple pure strategy subgame perfect equilibrium further the defender always plays the same pure strategy in any equilibrium and the attacker s equilibrium response is generically unique and entails no mixing the defender minmaxes the attacker in equilibrium even though the game is nonzero sum and the attacker strikes the site among its best replies that minimizes the defender s expected losses

cost effective and stochastic dominance approaches to stochastic pollution control most economic studies of pollution externalities focus on the relative efficiency or cost effectiveness of alternative pollution control instruments much less attention has been paid to policy goals and objectives however a comprehensive pollution control strategy depends on all of these choices this paper examines several efficiency properties of cost effective pollution control strategies in a stochastic setting when economic damages from pollution are unknown a number of policy goals are considered in this setting and under a primal approach it is found that certain stochastic dominance conditions must be satisfied for the strategies to exhibit desirable efficiency properties a dual approach to cost effective pollution control which is based on a stochastic dominance objective is also considered

tradeable permits for pollution control when emission location matters what have we learned our knowledge about tradeable permit approaches to pollution control has grown rapidly in the two decades in which they have received serious analytical attention not only have the theoretical models become more focused and the empirical work more detailed but we have now had over a decade of experience with them in the u s this article draws upon economic theory empirical studies and actual experience with implementation to summarize what we have learned about applying tradeable permits to air pollution control in the special circumstance where the spatial aspects of the problem are a prime consideration