Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?
Maureen Cropper, Curtis Carlson, Dallas Burtraw and Karen Palmer ,
( 108 )
Journal of Political Economy
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Title IV of the 1990 Clean Air Act Amendments (CAAA) established a market for transferable sulfur dioxide (SO,) emission allowances among electric utilities. This market offers firms facing high marginal abatement costs the opportunity to purchase the right to emit SO, from firms with lower costs, and this is expected to yield cost savings compared to a command-and-control approach to environmental regulation. This paper uses econometrically estimated marginal abatement cost functions for power plants affected by Title IVof the CAAA to evaluate the performance of the SO, allowance market.

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