Figure 1: Theoretical demand and supply of permits
Sources of inefficiency
Allocative efficiency can fall short of 100% when (1) transactions are executed by extra-
marginal traders and (2) mutually profitable trades are not executed. For example, in
Figure 2, allocative efficiency predicts that trades occurred between the six highest value
buyers, namely B10, B13, B15, B27, B20 and B6, and the six lowest cost sellers, namely
S30, S2, S10, S13, S15 and S21.3 Extra-marginal trade occurs if lowest value buyers
manage to trade and mutually profitable trade is not executed if the six highest value
buyers do not buy from low cost sellers.
Figure 2: The demand (Value) and supply (Cost) in period 1
3
Allocative efficiency is 45 when buyers B10, B13, B15, B27, B20 and B6 bought from sellers S30, S2,
S10, S13, S15 and S21.
More intriguing information
1. The name is absent2. A multistate demographic model for firms in the province of Gelderland
3. Apprenticeships in the UK: from the industrial-relation via market-led and social inclusion models
4. Protocol for Past BP: a randomised controlled trial of different blood pressure targets for people with a history of stroke of transient ischaemic attack (TIA) in primary care
5. FASTER TRAINING IN NONLINEAR ICA USING MISEP
6. Examining Variations of Prominent Features in Genre Classification
7. Ex post analysis of the regional impacts of major infrastructure: the Channel Tunnel 10 years on.
8. Centre for Longitudinal Studies
9. WP 1 - The first part-time economy in the world. Does it work?
10. The name is absent