The ambient permit system proposed in the literature for cost-effective pollution reduction is difficult to implement and may result in lower net benefits than using another instrument. The article develops a model for comparing the environmental net benefits of three policy instruments for...

We evaluate the performance of an environmental market in a less developed country based on the experience from Santiago-Chile's particulate matter control program. We find that grandfathering the permits has created economic incentives for incumbent sources to more readily declare their...