A Tradable Permit System in an Intertemporal Economy

Ken Ichi Akao*, Shunsuke Managi


研究成果: Article査読

2 被引用数 (Scopus)


It is known that in an intertemporal competitive economy, a tradable permit system may not achieve efficiency without setting appropriate permit interest rates (i.e., rewards for holding permits). To find the rates, however, we need to know in advance the path of efficient permit prices, which is difficult to obtain. This study intends to solve this problem in two ways. First, we analyze a special case in which the permit interest rates are given by a simple rule. For example, if the marginal abatement cost of pollution emission is constant, then the appropriate rate is to equal the monetary interest rate. As is the case for global warming, if the damage is caused in the future far beyond the planning period of the environmental program, the appropriate rate coincides with the marginal self-recovery of environmental stock under certain conditions. As a second approach, we propose a tradable permit system with a permit bank, as a mechanism by which the permit interest rates are generated endogenously without governmental intervention other than the issuance of permits. However, we also show that this approach raises the problem of indeterminacy of the equilibrium.

ジャーナルEnvironmental and Resource Economics
出版ステータスPublished - 2013 7月

ASJC Scopus subject areas

  • 経済学、計量経済学
  • 管理、モニタリング、政策と法律


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