Detrimental externalities, pollution rights, and the “Coase theorem”

@article{Chipman2012DetrimentalEP,
  title={Detrimental externalities, pollution rights, and the “Coase theorem”},
  author={John S. Chipman and Guoqiang Tian},
  journal={Economic Theory},
  year={2012},
  volume={49},
  pages={309-327}
}
This paper, which builds on Chipman (The economist’s vision. Essays in modern economic perspectives, 131–162, 1998), analyzes a simple model formulated by Hurwicz (Jpn World Econ 7:49–74, 1995) of two agents—a polluter and a pollutee—and two commodities: “money” (standing for an exchangeable private good desired by both agents) and “pollution” (a public commodity desired by the polluter but undesired by the pollutee). There is also a government that issues legal rights to the two agents to emit… 

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