Profits from violating controls on the use of a polluting input |
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Authors: | Ing-Marie Andréasson-Gren |
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Affiliation: | (1) The Beijer International Institute of Ecological Economics, The Royal Swedish Academy of Sciences, Box 50005, 104 05 Stockholm, Sweden |
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Abstract: | Profits from violating the quota, charge and permit market systems are compared. The results indicate that, for a given permit price, the violation profits of the charge and permit market systems are the same and exceed the profits from violating a quota system if the optimal use of inputs in a compliant market is lower than the quota. It is also shown that, under a permit market system, the occurrence of violation decreases the equilibrium price of permits. This implies that the profits from violating a permit market are lower than violation profits of a charge system. |
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Keywords: | Policy instruments polluting input violation profits |
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