The sulfur dioxide (SO₂) cap and trade program established in the 1990 Clean Air Act Amendments is celebrated for reducing abatement costs ($0.7 to $2.1 billion per year) by allowing emissions allowances to be traded. Unfortunately, places with high marginal costs also tend to have high marginal...

The United States' experimentation with emissions trading in the 1990s was an important first step in controlling air pollution while maximizing benefits from emissions that do occur. However, trading programs to date suffer a serious flaw: they treat all traded emissions of equal volume the...