摘要：In the standard economic model of cap and trade policies, the regulator isassumed to place zero value on pollution reductions below the cap. This paper considersan alternative case, where the policy makers can manipulate the rules of the program toachieve improved environmental performance. This is achieved by manipulating thetrading ratio, the units of pollution credits that are obtained for each unit of pollutionreduction. Using a parsimonious model of a transferable discharge permits program, weidentify the environmentally optimal trading ratio that maximizes the environmentalgains of trading. The model suggests an alternative explanation why non-unitary tradingratios are common and is a counterpoint to the cost-minimizing model that predominatesin economics. We conclude by recommending that a middle-ground should be sought,where both environmental gains and cost efficiencies are given weight.
