Internalisierung der externen Effekte von CO2-Emissionen

The authors analyze the question which measures will be most efficient in reducing CO2-Emissions if a country has chosen a reduction target. They compare the possibilities of using taxes or subsidies to internalize externalities. They assert that internalizing externalities through subsidies is not possible in a consistent way and will create new distortions in the economy, in contrast to a tax approach. Additionally, the tax approach leads to increasing state revenues which can be used to improve the allocation in the whole economy. Therefore the tax approach should be expended and redeem existing subsidies.