Market power and compliance with output quotas

Publication year: 2011 Source: Resource and Energy Economics, Available online 23 December 2011 Aaron Hatcher This paper examines the compliance behaviour of a dominant firm in an output quota market when the firm is able to exercise market power in both the quota and output markets. Provided the firm has an initial quota endowment which is strictly positive, under some circumstances the firm may find it profitable to comply or even over- comply in its quota demand, even in the absence of enforcement.

Publication year: 2011 Source: Resource and Energy Economics, Available online 23 December 2011 Aaron Hatcher This paper examines the compliance behaviour of a dominant firm in an output quota market when the firm is able to exercise market power in both the quota and output markets. Provided the firm has an initial quota endowment which is strictly positive, under some circumstances the firm may find it profitable to comply or even over- comply in its quota demand, even in the absence of enforcement.

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Market power and compliance with output quotas