Germain, Marc; Steenberghe, Vincent Van; Magnus, Alphonse - In: Journal of Public Economic Theory 6 (2004) 5, pp. 737-757
This paper analyzes how the way emission permits are traded-their market microstructure-affects the optimal policy to be adopted by the environmental agency. The microstructure used is one of a quote driven market type, which characterizes many financial markets. Market makers act as...