...Elias Asproudis; Maria José Gil-Moltó In this paper, we show that the participation by an environmental group in a permit market does not necessarily result in more investment in abatement or even less pollution. There is a U-shaped relationship between the emission per unit of output and the extra...

... prices, and may shift production from the low to the high cost firm. In addition, it may induce the firms to choose an inferior abatement technology and a more polluting production technology. Consider a duopolistic industry in which the firms have emission permits (r₁...