Market-based experiment -- A political history of federal acid rain legislation -- The political economy of allowance allocations -- The pre-1995 trend in SOb2s emissions -- Title IV compliance and emission reductions, 1995-97 -- Emissions trading: the effect on abatement behavior -- Emissions trading: development of the allowance market -- Title IVs voluntary compliance program -- Cost of compliance with title IV in phase I -- Cost savings from emissions trading -- Errors, imperfections, and allowance prices -- Concluding observations. Provides a comprehensive, in-depth description and evaluation of the first three years' experience with the U.S. Acid Rain Program. This environmental control program is the world's first large-scale use of a tradable emission permit system for achieving environmental goals. The book analyzes the behavior and performance of the market for emissions permits, called allowances in the Acid Rain Program, and quantifies emission reductions, compliance costs, and cost savings associated with the trading program. The book also includes chapters on the historical context in which this pioneering program developed and the political economy of allowance allocations.