In this paper we advocate a new initial allocation mechanism for a tradable pollution permit market. We outline a Permit Allocation Contest (PAC) that distributes permits to firms based on their rank relative to other firms. This ranking is achieved by ordering firms based on an observable...

Effective environmental policy should consider how the financiers of polluting firms behave. In our theoretical model describing the periods before and after policy implementation, loan spreads for firms participating in cap-and-trade programs are a function of the costs of compliance, the...