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Published November 1984 | Published
Journal Article Open

Market power and transferable property rights

Abstract

The appeal of using markets as a means of allocating scarce resources stems in large part from the assumption that a market will approximate the competitive ideal. When competition is not a foregone conclusion, the question naturally arises as to how a firm might manipulate the market to its own advantage. This paper analyzes the issue of market power in the context of markets for transferable property rights. First, a model is developed that explains how a single firm with market power might exercise its influence. This is followed by an examination of the model in the context of a particular policy problem--the control of particulate sulfates in the Los Angeles region.

Additional Information

© 1984 by the President and Fellows of Harvard College. The work reported here was supported by the Environmental Quality Laboratory at Caltech and the California Air Resources Board. I would like to thank Jim Quirk, Roger Noll, Jennifer Reinganum, and Robert Dorfman for providing helpful comments. The views expressed herein, including any remaining errors, are solely the responsibility of the author. Formerly SSWP 402.

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August 19, 2023
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