This paper asserts that reporting of the ratio of welfare gains to tax revenue should be standard protocol in economic analyses of externality correcting taxes. That this comparison might matter is somewhat of a "blind spot" in most economic analyses, for it plays virtually no role when...

Renewable fuel standards, low carbon fuel standards, and ethanol subsidies are popular policies to incentivize ethanol production and reduce emissions from transportation. Compared to carbon trading, these policies lead to large shifts in agricultural activity and unexpected social costs. We...

Electrification of transportation and buildings to reduce greenhouse gas (GHG) emissions requires massive switching from natural gas and refined petroleum products. All three end-use energy sources are mispriced due in part to the unpriced pollution they emit. Natural gas and electricity...

We study local carbon policy to address the consequences of climate change. Standard analysis suggests that the social cost of carbon determines optimal carbon policy. We start by using the spatial integrated assessment model in Cruz and Rossi-Hansberg (2021) to measure the local social monetary...

Decarbonization and electrification will require a transformed electricity grid. Our long-run model of entry and exit of generation and storage capacity captures crucial aspects of the electricity industry such as time-varying demand for electricity, intermittency of renewables, and...

There is widespread agreement among economists - and a diverse set of other policy analysts - that at least in the long run, an economy-wide carbon pricing system will be an essential element of any national policy that can achieve meaningful reductions of CO2 emissions cost-effectively in the...

Output-based carbon regulations--such as fuel economy standards and the rate-based standards in the Clean Power Plan--create well-known incentives to inefficiently increase output. Similar distortions are created by attribute-based regulations. This paper demonstrates that, despite these...

Market-based environmental policies are widely adopted on the basis of allocative efficiency. However, there is a growing distributional concern that market forces could increase the pollution exposure gap between disadvantaged and other communities by spatially reallocating pollution. We...

Tradable performance standards are widely used sectoral regulatory policies. Examples include the US lead phasedown, fuel economy standards for automobiles, renewable portfolio standards, low carbon fuel standards, and--most recently--China's new national carbon market. At the same time, theory...