A Common Pool Market Formulation for Trading Emission Discharge Permits

摘要

A potential problem for cap and trade policies which are based on an emission discharge permit (EDP) is the existence of "hot spots." These occur when regional air quality standards are violated when EDP trades take place. Such problems can be resolved by using an EDP system that is based on a common-pool permit trading market coupled with regulatory tiering. In this paper, we design and implement such a model. Using a set of linear programming formulations and a set of numerical simulations we aim to demonstrate the usefulness of the common pool market design for dealing with the specific environmental problems.