We provide a framework for evaluating potential effects of introducing tradable quotas to a sector. The effects depend on the economies of scale and scope of the production technology, and on firms' ability and willingness to learn best practice methods (catching up) and to change their input...

The potential gains from a regulatory change allowing for reallocation of marketable nitrogen emission permits under a cap and trade system are analyzed in a dynamic context using Data Envelopment Analysis to formulate linear programming models. In these models new, more environmental friendly...

Using Data Envelopment Analysis (DEA), we provide a framework to analyze the potential gains from quota trading. We compare the industry profit and structure before and after a free trade reallocation of production quotas. The effects of tradable production quotas depend on several technological...