Transferable licenses versus nontransferable licenses: What is the difference?

Kala Krishna, Ling Hui Tan

Research output: Contribution to journalArticle

9 Scopus citations

Abstract

This paper questions the presumption that transferable licenses are worth more and result in higher welfare. We show that the price of a transferable license may be lower than that of its nontransferable counterpart if the underlying quota is not very severe. However, transferability is preferable to nontransferability if consumer surplus and license revenue have equal weight in the welfare function. We also examine whether licenses will be monopolized by domestic producers with market power. The models have implications for several issues, including the design of pollution permits and how to maximize revenue from ticket sales.

Original languageEnglish (US)
Pages (from-to)785-800
Number of pages16
JournalInternational Economic Review
Volume40
Issue number3
DOIs
StatePublished - Jan 1 1999

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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