arrow checkmark code cross email facebook magnifier pdf phone plus twitter user youtube


Publicado en: Documento de trabajo

Market power in an exhaustible resource market: The case of storable pollution permits

Juan-Pablo Montero; Matti Liski

Documento de Trabajo IE-PUC, N°329, 2008

Abstract: Motivated by the structure of existing pollution permit markets, we study the equilibrium path that results from allocating an initial stock of storable permits to a large polluting agent and a competitive fringe. A large agent selling permits in the market exercises market power no differently than a large supplier of an exhaustible resource. However, whenever the large agent’s endowment falls short of its efficient endowment –allocation profile that would exactly cover its emissions along the perfectly competitive path– the market power problem disappears, much like in a durable-good monopoly. We illustrate our theory with two applications: the carbon market that may eventually develop under the Kyoto Protocol and beyond and the US sulfur market.


Descargar documento