University of California Energy Institute

PWP-019

Linearly Exchangeable Permits for the Efficient Control of Multiple Pollutants

by James B. Bushnell (U.C. Energy Institute) and Eric Friedman (Duke University)

In PWP-019, Bushnell and Friedman construct a system of Linearly exchangeable emission allowances for multiple pollutants which interact. These permits guarantee a bound on environmental damage, while allowing flexibility in the amounts of individual pollutants. Mitigation cost savings can thus be achieved with no added risk of increased environmental damage. Such permits would also be applicable in other decentralized resource allocation problems.