Hedonic Prices of Sulfur in Coal under the U.S. SO2 Allowance Market
نویسنده
چکیده
This study investigates the efficiency of pollution permit markets by conducting an empirical study of the U.S. SO2 market. A hedonic model of coal price is estimated by using the coal price data from 1985 to 1998. The estimation results showed that the sulfur premium was in the same order as the SO2 allowance prices in the EPA auction. In addition, for 1997 and 1998, the SO2 allowance prices were in 95% confidence intervals for a relevant range of sulfur content levels. In 1995, however, the deviation of the SO2 allowance price from the sulfur premium was found. This deviation may have been caused by the market power of the coal mine companies in Montana and Wyoming.
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