1. ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. C H A P T E R 13 PROPERTY RIGHTS

2. ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. FIGURE 13.1 An illustration of the marginal conditions for an efficient level of abatement, trading off the marginal cost of abatement for the refinery (MC) with the marginal benefit to the car factory (MB).

3. ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. FIGURE 13.2 Illustration of trading of permits between two firms.

4. ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc. FIGURE 13.3 Illustration of how an inefficient initial distribution of permits can lead to a distortion when one firm has market power. –MC, marginal savings from emitting for large firm; P(L – E), permit price; L B, initial permit issuance to the large firm; E*, efficient level of emissions; E**, manipulated level of emissions.