ABSTRACT
The initial motivation of this study was to evaluate the performance of the Chicago volatile organic compounds (VOC) cap-and-trade market, using economic tests of efficiency, statistical methods to appraise market variables, and judgment to assess outcomes. The intention was to provide a careful quantitative appraisal of the attainment of stated air quality goals, the cost-effectiveness of the market compared with traditional regulations, the control innovation stimulation of market incentives, and the nonconfrontational character of this decentralized and innovative approach. It was not the expectation that a pioneering local market system applied to control a precursor of low-level ozone would achieve all goals or establish a market design leaving little room for improvement. Rather, it was hoped that a thorough study could record the strengths and weaknesses of the market design and suggest areas for improvement. The Chicago approach could then be recommended for use in other urban areas beset with low-level ozone air quality problems.
