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Information and Pollution Permit Markets

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  • David Colander

Abstract

In a recent article Smith and Yates (Smith and Yates, 2003) argued that regulators could gain additional information about the optimal number of permits to issue from two-sided markets. This paper argues that they are incorrect in their assertion because the market they refer to is an asymmetric two-sided market in which individuals are only allowed to decrease the number of permits. When a symmetric two-sided market is considered, the public good nature of the problem makes it unlikely that any useful information can come from a two-sided market.

Suggested Citation

  • David Colander, 2004. "Information and Pollution Permit Markets," Middlebury College Working Paper Series 0410, Middlebury College, Department of Economics.
    • Handle: RePEc:mdl:mdlpap:0410
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    File URL: http://www.middlebury.edu/services/econ/repec/mdl/ancoec/0410.pdf
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