Tradable allowances in a restructuring electric industry

John Tschirhart*, Shiow Ying Wen

*Corresponding author for this work

Research output: Contribution to journalJournal Article peer-review

1 Scopus citations


The SO2 tradable allowance program has been introduced into an electric industry undergoing dramatic changes. Entry of nonutilities into the industry and the emergence of stranded costs are two major changes that are shown to have an impact on the market for allowances and the industry's incentives to switch to cleaner fuels. The degree of impact depends on the extent to which consumers bypass traditional utilities and buy from entrants, and on public utility commission policies regarding the recovery of stranded costs. In turn, the amount of stranded costs depends on fuel switching. The results follow from simulations of a two-utility model that illustrate the qualitative effects of changing policies.

Original languageEnglish
Pages (from-to)195-214
Number of pages20
JournalJournal of Environmental Economics and Management
Issue number2
StatePublished - 09 1999


Dive into the research topics of 'Tradable allowances in a restructuring electric industry'. Together they form a unique fingerprint.

Cite this