We explore the efficacy of price and quantity controls in a dynamic set up in which the decisions of some agents are irreversible. We demonstrate that the assumption of irreversibility improves the performance of a tax relative that of a system of tradable quotas and significantly alters the...

Equivalence scales are defined as the ration between the cost function of households of different size and composition. It is shown that the household cost function depends on the distribution of income or utility within the household. Therefore, neither cost functions nor equivalence scales are...