Costos de cumplimiento y poder de mercado: Aplicacion al programa de compensacion de emisiones

Abstract

This article analyzes the impact of market power on a transferable emissions permit system (TEPS). The application is carried out for the case of the Programa de Compensación de Emisiones in the city of Santiago, Chile, using data for 1997. In addition to the abatement costs, the costs of enforcing the system are also considered. Specifically, the magnitude of the efficiency loss caused by a non-optimal initial allocation of permits is quantified. Our results show that the costs of inducing complete compliance are important and its relevance depends on the target level of the aggregate emissions. Finally, the results also suggest that the presence of market power causes a modest increase in total compliance costs. The result is robust to different levels for the parameters used in the simulations.