We investigate a central issue in the climate change debate associated with the Kyoto Protocol: the likely performance of international greenhouse gas trading mechanisms. Virtually all design studies and many projections of the costs of meeting the Kyoto targets have assumed that an...

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...