Intertemporal pricing of sulfur dioxide allowances
The Clean Air Act Amendments of 1990 initiated the first large-scale use of the tradable permit approach to pollution control. The theoretical case for this approach rests on the assumption of an efficient market for emission rights. This paper presents the inter-temporal pattern of allowance prices...
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| Format: | Working Paper |
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MIT Center for Energy and Environmental Policy Research
2009
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| Online Access: | http://hdl.handle.net/1721.1/45080 |
| _version_ | 1811071114415177728 |
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| author | Bailey, Elizabeth M. |
| author2 | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. |
| author_facet | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. Bailey, Elizabeth M. |
| author_sort | Bailey, Elizabeth M. |
| collection | MIT |
| description | The Clean Air Act Amendments of 1990 initiated the first large-scale use of the tradable permit approach to pollution control. The theoretical case for this approach rests on the assumption of an efficient market for emission rights. This paper presents the inter-temporal pattern of allowance prices that should be observed in the market for sulfur dioxide allowances in world of certainty with no transaction costs, and demonstrates that this pattern is roughly consistent with what is observed. Where there are deviations, these deviations can be explained using the theory that is applied to other well established, well functioning markets. The empirical analysis in this paper suggests that the forward market for emission rights has become reasonably efficient. |
| first_indexed | 2024-09-23T08:46:16Z |
| format | Working Paper |
| id | mit-1721.1/45080 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T08:46:16Z |
| publishDate | 2009 |
| publisher | MIT Center for Energy and Environmental Policy Research |
| record_format | dspace |
| spelling | mit-1721.1/450802019-04-10T07:26:06Z Intertemporal pricing of sulfur dioxide allowances Bailey, Elizabeth M. Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. The Clean Air Act Amendments of 1990 initiated the first large-scale use of the tradable permit approach to pollution control. The theoretical case for this approach rests on the assumption of an efficient market for emission rights. This paper presents the inter-temporal pattern of allowance prices that should be observed in the market for sulfur dioxide allowances in world of certainty with no transaction costs, and demonstrates that this pattern is roughly consistent with what is observed. Where there are deviations, these deviations can be explained using the theory that is applied to other well established, well functioning markets. The empirical analysis in this paper suggests that the forward market for emission rights has become reasonably efficient. Funded by the MIT Center for Energy and Environmental Policy Research and the National Acidic Precipitation Assessment Program. 2009-04-03T17:08:08Z 2009-04-03T17:08:08Z 1998 Working Paper 98006 http://hdl.handle.net/1721.1/45080 39305371 MIT-CEEPR (Series) ; 98-006WP. 17 p application/pdf MIT Center for Energy and Environmental Policy Research |
| spellingShingle | Bailey, Elizabeth M. Intertemporal pricing of sulfur dioxide allowances |
| title | Intertemporal pricing of sulfur dioxide allowances |
| title_full | Intertemporal pricing of sulfur dioxide allowances |
| title_fullStr | Intertemporal pricing of sulfur dioxide allowances |
| title_full_unstemmed | Intertemporal pricing of sulfur dioxide allowances |
| title_short | Intertemporal pricing of sulfur dioxide allowances |
| title_sort | intertemporal pricing of sulfur dioxide allowances |
| url | http://hdl.handle.net/1721.1/45080 |
| work_keys_str_mv | AT baileyelizabethm intertemporalpricingofsulfurdioxideallowances |