When Should Uncertain Non-point Emissions Be Penalized in a Trading Program?
Posted: 29 Jan 2008
Date Written: 2007-04
When non-point source pollution is stochastic and the damage function is convex, intuition might suggest it is more important to control a non-point pollution source than a point source. Earlier research has provided sufficient conditions such that the permit price for a unit of ex-ante expected emissions should be higher than the permit price for a unit of certain emissions. Herein we provide a set of necessary and sufficient conditions such that this is the case. An approach to testing for the validity of the condition set is available, and has been applied to a related problem.
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