Implementing tradable permits for sulfur oxides emissions : a case study in the South Coast Air Basin
Creators: name: Cass, Glen R.
name: Hahn, Robert W.
name: Noll, Roger G.
name: Krier, James E.
name: Gerard, James M.
name: Rogerson, William P.
name: Fox, George
name: Paranjape, Asha
Publisher: name: California Institute of Technology
Year: 1982

description: Tradable emissions permits have important theoretical advantages over source-specific technical standards as a means for controlling pollution.  Nonetheless, difficulties can arise in trying to implement an efficient, competitive market in emissions permits.  Simple workable versions of the market concept may fail to achieve the competitive equilibrium, or to take account of important complexities in the relationship between the pattern of emissions and the geographical distribution of pollution.  Existing regulatory law may severely limit the range of market opportunities that states can adopt.

This report examines the feasibility of tradable permits for controlling  particulate sulfates in the Los Angeles airshed.  Although the empirical part of the paper deals with a specific case, the methods developed have general applicability.  Moreover, the particular market design that is proposed -- an auction process that involves no net revenue collection by the state -- has attractive features as a general model.
description: © 1982 Environmental Quality Laboratory. California Institute of Technology. 

The co-principal investigators of this project were Glen Cass and Roger Noll. Most of the empirical work in estimating abatement costs, simulating market performance and organizing experiments was undertaken by Robert Hahn. In addition, coat studies of specific industries were undertaken by George Fox, Asha Paranjape and William
Rogerson. The legal analysis of the fit between tradable emissions permits and existing law was performed by James Krier. James Gerard was responsible for the work on the relationship of tradable permits to public utility regulation.

The authors gratefully acknowledge the help of their
colleagues at Caltech in discussing the progress of the project: Robert Forsythe, Charles Plott, and especially Greg McRae. In addition, numerous helpful suggestions were received at seminars and con£ erences a t the American Enterprise Institute, the University of Chicago, Duke University, Carnegie-Mellon University, Stanford
University, Northwestern University, the University of Washington, Washington University of St. Louis, the University of British Columbia, the University of California at Los Angeles, Florida State University, the International Institute of Management in Berlin, Pomona College, the U. S. Regulatory Council, the U. S. Department of Commerce, and the U.S. Environmental Protection Agency. We are also grateful to the employees of numerous businesses in Los Angeles who assisted us in compiling our data on abatement costs. Only our promise of anonymity prevents us from giving them credit by name.

This work could not have been completed without the
cooperation and assistance provided by the staff of the South Coast Air Quality Management District and the California Air Resources Board. In addition, we would like to acknowledge the constructive input received from Jan Bush, Larry Caretto, Art Davidson, Frank DiGenova, A1 Gordon, and John Holmes -- who attended review sessions
throughout the course of the project. Finally, we would like to express thanks to Malcolm Dole, our contract manager, who actively supported the development of innovative approaches for achieving air quality goals.

This report was submitted in fulfillment of ARB contract
number A8-141-31, "A Study of Transferable Licenses to &it Air Pollutants i n the South Coast A i r Basin," by the Environmental Quality Laboratory of the California Institu- te of Technology under the partial sponsorship of the California A i r Resources Board. Work was completed
as of June 30, 1982.
description: Submitted - TR000053-Executive-Summary.pdf
Submitted - TR000053-Report.pdf