Virtually every analysis of cap-and-trade programs assumes that firms must surrender permits as they pollute. However, no program, existing or proposed, requires such continual compliance. Some (e.g. the Acid Rain Program limiting SO2 emissions) require compliance once a year; others (e.g. the...

We review the literature on bankable emissions permits that has developed over the last two decades. Most articles analyze either theoretical or simulation models. The theoretical literature considers the problem of minimizing the discounted sum of social costs and the possibility of...

In theory, how a fixed number of storable pollution permits are allocated in a cap-and-trade program should not affect intertemporal prices unless participants fail to receive permit endowments before they plan to use them. "Backloading" can create inefficiency; "frontloading" cannot. The...