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Farrell, Alex, Robert Carter, and Roger Raufer. 1999. "The NOx Budget: Market-Based Control of Tropospheric Ozone in the Northeastern United States." Resource and Energy Economics 21(2): 103-124.

For more information about this publication, you may contact:

Dr. Roger Raufer, P.E., Department of City and Regional Planning, University of Pennsylvania, 210 South 34th St., Philadelphia, PA 19104-6311, (215) 898-2775, email: raufer "at"



The NOx Budget is a marketable emissions allowance system currently being adopted by states in the Northeastern U.S. to reduce tropospheric ozone concentrations to healthful levels in a cost-effective manner. Oxides of nitrogen (NOx) are currently regulated within the existing Command and Control (CAC) framework. The introduction of a market-based approach will further reduce emissions, but it will not resolve all regulatory uncertainties. These implementation concerns are identified and discussed.  Cost savings and emissions reductions patterns which will arise under several different scenarios are determined through the use of a dynamic, relaxed mixed-integer linear programming model of the NOx allowance market.  Like other market-based pollution control programs, the NOx Budget is found to be more efficient that CAC options. Restrictions on the market designed to address perceived flaws are found to be expensive but ineffectual.

Keywords: environmental regulation, marketable allowances, air pollution


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