Discussion Paper

To Trade or Not to Trade: Firm-Level Analysis of Emissions Trading inSantiago, Chile

Nov 6, 2009 | Jessica Coria, Åsa Lofgren, Thomas Sterner

This was created in partnership with Environment for Development .

Abstract

Whether tradable permits are appropriate for transition and developing economies—given their special social and cultural circumstances, such as the lack of institutions and lack of expertise with market-based policies—is much debated. We conducted interviews and surveyed a sample of firms subject to emissions trading programs in Santiago, Chile, one of the first cities outside the OECD that has implemented such trading. The information gathered allowed us to study which factors affect the performance of the trading programs inpractice and the challenges and advantages of applying tradable permits in less developed countries.