Optimal mix of emissions taxes and cap-and-trade Export

@article{citeulike:3973517, abstract = {In practice, different emitters of a particular pollutant are sometimes subjected to different control mechanisms. This paper focuses on the situation where a part of the economy is regulated by a cap-and-trade program, while the rest is subjected to an emissions tax. Using an extended version of Weitzman's 'Prices vs. Quantities' model [M.L. Weitzman, Prices vs. quantities, Revi. Econ. Stud. 41 (1974) 477–491], we analyze the conditions under which this is superior, from an efficiency point of view, to subjecting the whole economy to either of these control mechanisms. The paper addresses a crucial trade-off between two sources of efficiency loss, one due to cost-effectiveness issues and another due to emissions volume. This trade-off determines the optimal size of each sector. It is shown that the size of the taxed sector, at an optimum, increases with the relative steepness of the aggregate marginal abatement cost function.}, author = {Mandell, S.}, citeulike-article-id = {3973517}, citeulike-linkout-0 = {http://dx.doi.org/10.1016/j.jeem.2007.12.004}, citeulike-linkout-1 = {http://linkinghub.elsevier.com/retrieve/pii/S0095069608000387}, doi = {10.1016/j.jeem.2007.12.004}, issn = {00950696}, journal = {Journal of Environmental Economics and Management}, keywords = {abatement, cap-trade, climate, co2, economics, emissions, mitigation, policy, tax}, month = {September}, number = {2}, pages = {131--140}, posted-at = {2009-01-28 16:26:56}, priority = {2}, title = {Optimal mix of emissions taxes and cap-and-trade}, url = {http://dx.doi.org/10.1016/j.jeem.2007.12.004}, volume = {56}, year = {2008} }

TY - JOUR ID - citeulike:3973517 L3 - citeulike-article-id:3973517 N2 - In practice, different emitters of a particular pollutant are sometimes subjected to different control mechanisms. This paper focuses on the situation where a part of the economy is regulated by a cap-and-trade program, while the rest is subjected to an emissions tax. Using an extended version of Weitzman's ‘Prices vs. Quantities’ model [M.L. Weitzman, Prices vs. quantities, Revi. Econ. Stud. 41 (1974) 477–491], we analyze the conditions under which this is superior, from an efficiency point of view, to subjecting the whole economy to either of these control mechanisms. The paper addresses a crucial trade-off between two sources of efficiency loss, one due to cost-effectiveness issues and another due to emissions volume. This trade-off determines the optimal size of each sector. It is shown that the size of the taxed sector, at an optimum, increases with the relative steepness of the aggregate marginal abatement cost function. IS - 2 JF - Journal of Environmental Economics and Management SN - 00950696 EP - 140 TI - Optimal mix of emissions taxes and cap-and-trade VL - 56 SP - 131 KW - abatement KW - cap-trade KW - climate KW - co2 KW - economics KW - emissions KW - mitigation KW - policy KW - tax AU - Mandell, S PY - 2008/09// UR - http://dx.doi.org/10.1016/j.jeem.2007.12.004 ER -