Two-Sided Emissions Allowance Markets and the Self-Correction Criterion

摘要

Recent contributions in the environmental economics literature analyze pollution allowance markets when pollutees participate in the market by buying and retiring allowances. These new contributions indicate that previous legal scholarship that compares allowance markets, emissions standards, and emission taxes greatly underestimate the advantages of using markets. When pollutees participate in allowance markets, overall emissions are necessarily lower (than would be with equivalent standards), social welfare is necessarily higher, and pollutees are able to express their preferences for environmental quality through the marketplace. In conclusion, policymakers should reassess the use of standards or emissions when allowance markets are feasible.