---D East <[log in to unmask]> wrote:
> Steve wrote:
> > Actually, I think your reasoning is incorrect for the following
> > reason. I don't think individuals really care what plant is doing
the
> > polluting. That is I don't think individuals care that they air is
> > dirty because firm A or B is polluting, but that individuals care
that
> > the air is dirty and they want it reduced (I am assuming that the
two
> > firms produce the same pollution). The reason for this is that when
> > they go outside they don't see which particles of pollution are
> > produced by firm A and those that are produced by firm B. When they
> > take a breath and cough they don't say "Goddamn that firm B. I wish
> > someone would do something about firm B."
> >
>
> Surely this is false? If I remember my Risk management course (it
was a
> while ago) the NIMBY (not in my back yard) scenario was prevalent.
People
> may not object to trading credits in principle but if its the local
factory
> doing to polluting then its different story.
> You seem to be hypothesising a ideal situation with two factories in
the
> local town trading credits when in actual fact it is more likely
the trade
> will take place across a considerable distance and will therefore any
> benefit will vary enormously with location.
>

Duncan,

You do have a point in that the spatial component would cause an
uneven distribution of pollution. However, even in a town with one
factory would still reduce its pollution. What has gotten lost in the
latest flurry of posts is that all firms would be reducing pollution.
Some would re-tool and others would buy permits. The key to having
the permit or credit trading scheme work is for the permits to be
somehow tied to production. That way the marginal cost curve of the
firm would shift up at all levels of production. If we assume that
price is a constant (from the firm's perspective--i.e. the market is
competitive) then output falls and so does pollution.

Steve
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