This paper examines the determinants of emission credit allocations under the Regional Clean Air Incentives Market (RECLAIM) - a program aimed at reducing nitrogen oxides (NOX) and sulfur oxides (SOX) - in the greater Los Angeles area. Our results suggest that deviations in the allocation of emission credits can be systematically explained by firm-level factors and the location of the facility. Our results also indicate that deviations in the allocation of emission credits may have been made in an attempt to regulate toxics, and that certain industries were protected in the early stages of the program
