Permit markets are celebrated as a policy instrument since they allow (i) firms to equalize marginal costs through trade and (ii) the regulator to distribute the burden in a politically desirable way. These two concerns, however, may conflict in a dynamic setting. Anticipating the regulator's...

The selection of political representatives depends on the political system. Principals, such as voters or districts, may benefit by strategically electing representatives different from themselves. While a status-quo biased delegate may be a better negotiator, an enthusiastic representative has...