PT  - JOURNAL ARTICLE
AU  - Holland, Stephen P.
AU  - Moore, Michael R.
TI  - When to Pollute, When to Abate? Intertemporal Permit Use in the Los Angeles NO<em><sub>x</sub></em> Market
AID  - 10.3368/le.88.2.275
DP  - 2012 May 01
TA  - Land Economics
PG  - 275--299
VI  - 88
IP  - 2
4099  - http://le.uwpress.org/content/88/2/275.short
4100  - http://le.uwpress.org/content/88/2/275.full
SO  - Land Econ2012 May 01; 88
AB  - We study intertemporal trading of nitrogen oxides permits in Southern California’s RECLAIM program. We model RECLAIM’s distinct intertemporal features: two overlapping permit cycles and two overlapping compliance cycles. In the model, competitive equilibrium is cost-effective, and firms have an incentive to delay abatement. From 1994 to 2006, RECLAIM facilities traded intertemporally by using permits of the opposite cycle. We test two theoretical propositions—delayed abatement and trading across cycles—with a difference-in-differences estimator and show weak, though inconclusive, support of the theory. The theoretical and empirical results are relevant to cap-and-trade programs with potential for overlapping permit cycles. (JEL Q58)