Lecture 06
Tradable Permits
Dana Andersen
ECON 467
,Roadmap
1. How do tradable permit systems work in theory and in the real world?
2. What happens under a tradable permit system?
,Tradable permits
, Tradable permits
How do tradable permit systems work?1
First, recall a regular emission standard: we set Ē at the point where MAC =
MD
This is easy with one firm, but what if we have several, or hundreds?
1 Tradable permit systems are also called cap and trade systems.
Tradable Permits
Dana Andersen
ECON 467
,Roadmap
1. How do tradable permit systems work in theory and in the real world?
2. What happens under a tradable permit system?
,Tradable permits
, Tradable permits
How do tradable permit systems work?1
First, recall a regular emission standard: we set Ē at the point where MAC =
MD
This is easy with one firm, but what if we have several, or hundreds?
1 Tradable permit systems are also called cap and trade systems.
