Seeing is Believing: Simulating Forest-Harvest Problems with Microsoft Excel in an Intermediate-Level Natural-Resource Economics Course
Perspective on Economic Education Research
We examine joint tradable permit markets as a self-enforcing mechanism to control correlated externality problems. By “correlated” we mean multiple pollutants that are jointly produced by a single source but which simultaneously cause differentiated regional and global externalities (e.g. smog and global warming). By “self-enforcing” we mean a mechanism that accounts for the endogeneity that exists between competing jurisdictions in the setting of environmental policy within a federation of regions. We find that joint domestic and international permit markets are Pareto efficient for a wide class of preferences.
Caplan, Arthur J. (2005) "Seeing is Believing: Simulating Forest-Harvest Problems with Microsoft Excel in an Intermediate-Level Natural-Resource Economics Course." Perspectives on Economic Education Research, 1(1), 44-52.