Taxes, permits, and climate change
By: Louis Kaplow
Contributors: National Bureau of Economic Research
Series: NBER working paper series -- working paper 16268; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16268.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] /
Description: "This essay revisits the question of instrument choice for the regulation of externalities in the context of climate change.  The central point is that the Pigouvian prescription to equate marginal control costs with the expected marginal benefits of damage reduction should guide the design of both carbon taxes and permit schemes.  Because expected marginal damage rises nonlinearly, a corresponding nonlinear tax - or an equivalent price implemented through a quantity-adjusted permit scheme - is second best.  Also considered are political factors, distinctive features of regulating a stock pollutant, and ex ante distortions due to the anticipation of transition relief (such as by receiving more free permits for greater emissions).  Finally, distributive concerns are examined, with emphasis on the conceptual and practical benefits of addressing distributive issues with the tax and transfer system rather through adjustments to regulatory schemes that usually render them less effective"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 9/23/2010.

Includes bibliographical references.

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Mode of access: World Wide Web.