Open AccessEMISSION PERMITS UNDER MONOPOLY
Author(s) -
Innes Robert,
Kling Catherine,
Rubin Jonathan
Publication year - 1991
Publication title -
natural resource modeling
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.28
H-Index - 32
eISSN - 1939-7445
pISSN - 0890-8575
DOI - 10.1111/j.1939-7445.1991.tb00247.x
Subject(s) - monopolistic competition , monopoly , oligopoly , microeconomics , monopsony , economics , market power , industrial organization , monopolization , perfect competition , cournot competition
This paper studies the regulation of pollution emissions when one polluting firm is a monopolist in its output market and other polluting firms are competitive in their output markets. It is shown that an emissions permit system can generally support a second‐best allocation when the monopolistic firm has market power in the emission permit market. The second‐best permit regulation specifies a permit endowment for the monopolist such that the monopolist is a net supplier of permits in the equilibrium. Extensions to cases of multiple monopoly, monopsony, and oligopoly are discussed.