Environmental markets distribute tradable rights on natural resources that are available for free on the earth such as water, biomass or clean air. In a framework where users differ solely in respect of their access to the resource, I investigate the allocation of rights that are accepted in the sense that, after trading, users obtain at least what they can achieve by sharing the resources they control. I show that, among all accepted rights, the more egalitarian ones do not allow any redistribution among users. Consequently, compared to an efficient allocation of resources, the net trading of rights always increases inequality.
Common-pool resources, environmental externalities, property rights, cooperative game, fairness, tradable quotas, emission permits.;
- C71: Cooperative Games
- D02: Institutions: Design, Formation, and Operations
- D63: Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- Q28: Government Policy
- Q38: Government Policy
- Q58: Government Policy
Stefan Ambec, “Environmental markets exacerbate inequalities”, TSE Working Paper, n. 20-1120, July 2020.
TSE Working Paper, n. 20-1120, July 2020