A POLLUTION RIGHTS TRADING GAME

This article describes a classroom game in which students simulate the U.S. EPA's market for emission allowances to understand the efficienc y benefits of market-based incentives for pollution control. It can be used in either a principles or environmental economics course. Acting as managers of coal-fired power plants facing different clean-zip cos ts, students compare the cost of pollution reduction to the cost of ac quiring permits to emit pollution. The game can be conducted in one 50 -minute class period with discussion of the results carried over to th e next class.