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Reducing transaction costs of tradable permit schemes using Blockchain smart contracts

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  • Sina Shahab
  • Zaheer Allam

Abstract

Tradable permit schemes (TPS) are market‐based policy instruments, which are claimed to be more statically and dynamically efficient in achieving their policy objectives compared to the traditional regulatory instruments. However, some researchers argue that the high level of transaction costs associated with these policy instruments might undermine their efficiency. This paper addresses this issue through exploring the use of Blockchain technology in order to lower transaction costs that arise from TPS transactions. More specifically, it identifies the benefits of using Blockchain smart contracts in implementing TPS that include: increasing the amount of relevant information available to interested actors thus reducing uncertainties; reducing the amount of irrelevant information available to interested actors thus decreasing complexities; correcting information asymmetries among the actors involved thus limiting opportunistic behaviours; lowering the need for the involvement of intermediaries thus decreasing direct monetary costs; and facilitating the linkage between buyers and sellers thus improving trading quality. These potential benefits can increase the efficiency of TPS by decreasing policy‐related transaction costs.

Suggested Citation

  • Sina Shahab & Zaheer Allam, 2020. "Reducing transaction costs of tradable permit schemes using Blockchain smart contracts," Growth and Change, Wiley Blackwell, vol. 51(1), pages 302-308, March.
    • Handle: RePEc:bla:growch:v:51:y:2020:i:1:p:302-308
    DOI: 10.1111/grow.12342
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    Cited by:

    1. Ma, Yanxin & Li, Shimei & Zhou, Liying, 2024. "Why are enterprises willing to assume social responsibility? Answers from the perspective of innovation," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 188-198.
    2. Onjewu, Adah-Kole Emmanuel & Walton, Nigel & Koliousis, Ioannis, 2023. "Blockchain agency theory," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    3. Zaheer Allam & David Jones, 2021. "Future (post-COVID) digital, smart and sustainable cities in the wake of 6G: Digital twins, immersive realities and new urban economies," Post-Print hal-03477845, HAL.
    4. Carlos Moreno & Zaheer Allam & Didier Chabaud & Catherine Gall & Florent Pratlong, 2021. "Introducing the “15-Minute City”: Sustainability, Resilience and Place Identity in Future Post-Pandemic Cities," Post-Print hal-03549665, HAL.
    5. Fatih Ecer & Tolga Murat & Hasan Dinçer & Serhat Yüksel, 2024. "A fuzzy BWM and MARCOS integrated framework with Heronian function for evaluating cryptocurrency exchanges: a case study of Türkiye," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 10(1), pages 1-29, December.
    6. Allam, Zaheer & Jones, David S., 2021. "Future (post-COVID) digital, smart and sustainable cities in the wake of 6G: Digital twins, immersive realities and new urban economies," Land Use Policy, Elsevier, vol. 101(C).

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