DIVISION OF ECONOMICS STIRLING MANAGEMENT SCHOOL The effects of rent seeking over tradable pollution permits
نویسندگان
چکیده
The establishment of a tradable permit market requires the regulator to select a level of aggregate emissions and then distribute the associated permits (rent) to speci c groups. In most circumstances, these decisions are often politically contentious and frequently inuenced by rent seeking behaviour. In this paper, we use a contest model to analyse the e¤ects of rent seeking e¤ort when permits are freely distributed (grandfathered). Rent seeking behaviour can inuence both the share of permits which an individual rm receives and also the total supply of permits. This latter impact depends on the responsiveness of the regulator to aggregate rent seeking e¤ort. Using a three-stage game, we show that rent seeking can inuence both the distribution of rents and the ex post value of these rents, whilst welfare usually decreases in the responsiveness of the regulator. Keywords: tradable permit market, rent seeking, initial allocation JEL classi cation numbers: D72, D78, Q53 Corresponding author: E-mail address: [email protected] (I. MacKenzie); Tel: +41 44 632 04 68; Fax: +41 44 632 13 62.
منابع مشابه
The Effects of Rent Seeking over Tradable Pollution Permits
The establishment of a tradable permit market requires the regulator to select a level of aggregate emissions and then distribute the associated permits to specific groups. Both these decisions create opportunities for rent seeking. In this paper, we use a contest model to analyse the incentives to rent seek for pollution permits and to analyse the consequences for social welfare. We find diffe...
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