Federal standards for fine particulate matter and tropospheric ozone have become increasingly stringent over the past several decades. States preparing attainment plans will be challenged with accounting for the regional and longer-range transport of these pollutants and their precursors and with the higher marginal costs of additional permanent or annual emissions reductions in the future. The objective of this research is to develop methods for evaluating the air quality impacts and cost-effectiveness of time-differentiated trading of nitrogen oxides (NOx) and sulfur dioxide (SO2) from electric generation units. Two markets will be considered as case studies: the Electric Reliability Council of Texas (ERCOT), which is an intra-state grid, and the Pennsylvania-New Jersey-Maryland (PJM) grid, which represents an inter-state grid.