Market power and compliance with output quotas

Aaron Hatcher

Research output: Contribution to journalArticlepeer-review

Abstract

This paper examines the compliance behaviour of a dominant firm in an output quota market when the firm is able to exercise market power in both the quota and the output markets. Provided the firm has an initial quota endowment which is strictly positive, under some circumstances the firm may find it profitable to comply or even over-comply in its quota demand, even in the absence of enforcement. The results are compared to those found in the pollution permit literature for a firm with market dominance only in the permit market, to which some additional observations are also added concerning efficiency outcomes under non-compliance.
Original languageEnglish
Pages (from-to)255-269
Number of pages15
JournalResource and Engery Economics
Volume34
DOIs
Publication statusPublished - Jan 2012

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