In urban areas around the world, increasing motorization and growing travel demand make the urban transportation sector an ever-greater contributor to local air pollution and greenhouse gas emissions. The situation is particularly acute in developing countries, where growing metropolitan regions...

This paper analyzes the dynamic effects of rate-of-return regulation on firms'emissions compliance behavior when the price of emissions permits is uncertain. The paper shows that uncertainty regarding the price of permits would motivate a regulated firm to adopt a more self-sufficient strategy...