Article

Using contests to allocate pollution rights

Details

Citation

MacKenzie IA, Hanley N & Kornienko T (2009) Using contests to allocate pollution rights. Energy Policy, 37 (7), pp. 2798-2806. http://www.sciencedirect.com/science/journal/03014215; https://doi.org/10.1016/j.enpol.2009.03.030

Abstract
In this paper we advocate a new initial allocation mechanism for a tradable pollution permit market. We outline a Permit Allocation Contest (PAC) that distributes permits to firms based on their rank relative to other firms. This ranking is achieved by ordering firms based on an observable ‘external action’ where the external action is an activity or characteristic of the firm that is independent of their choice of emissions in the tradable permit market. We argue that this mechanism has a number of benefits over auctioning and grandfathering. Using this mechanism efficiently distributes permits, allows for the attainment of a secondary policy objective and has the potential to be more politically appealing than existing alternatives.

Keywords
tradeable permits; contests; Environmental management; Environmental permits

Journal
Energy Policy: Volume 37, Issue 7

StatusPublished
Publication date31/07/2009
Publication date online17/04/2009
Date accepted by journal10/03/2009
URLhttp://hdl.handle.net/1893/1655
PublisherElsevier
Publisher URLhttp://www.sciencedirect.com/science/journal/03014215
ISSN0301-4215