Abstract
A mixed-integer programming model that minimizes the social abatement cost is used to investigate whether a market equilibrium condition could be reached in a newly proposed permit-trading market for nitrogen oxide control in Taiwan. Unlike in previous studies, unit pollution abatement cost is determined endogenously by incorporating technology adoption as a binary decision variable. The results show that when technologies are lumpy and irreversible, disequilibrium might occur due to firms' inability to manage their emission levels after installing equipment with fixed size and control capacity. © 2007 Springer Science+Business Media B.V.