Citizens' demand for permits and Kwerel''s incentive compatible mechanism for pollution control

An interesting feature of pollution permit markets is that citizens may purchase permits to directly lower the levels of pollution. Kwerel's mechanism (Review of Economic Studies~1977) is not incentive compatible when citizens demand permits. We show that a modification of Kwerel''s mechainism, the minimum-price mechanism, is incentive compatible when citizens demand permits, even in the case where there is uncertainty about the damages from pollution.

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Year of publication:	2007-02-01
Authors:	Yates, Andrew ; English, Daniel
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 17.2007, 4, p. 1-9
Publisher:	AccessEcon

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Extent:	application/pdf
Type of publication:	Article
Classification:	Q2 - Renewable Resources and Conservation; Environmental Management ; D0 - Microeconomics. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010629661