Wednesday, August 06, 2008

Unit 1: Tradable permits in action: Drax power station

From Geoff Riley comes this interesting post showing tradable permits in action

http://www.tutor2u.net/blog/index.php/economics/comments/drax-feels-the-heat-of-rising-carbon-prices/

a) What is the market failure associated with Drax?
b) To what extent does the article suggest that the tradable permits system will reduce the market failure in the long run?

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