tax on pollution and a subsidy on abatement activity. We help elucidate this policy choice by exploring the tax-subsidy … financing the tax or subsidy. We solve the model numerically based on Chinese data. We find that if revenue-recycling via lump … for the distribution of income between wages and profits) as an equivalent abatement subsidy. The move from recycling to …

. We, first, derive analytically the optimal subsidy in a spatial partial equilibrium model of a city with two zones where … vehicles and electric vehicles. There we find that the optimal subsidy rate is the sum of changes in externality costs … simulations to calculate sign and size of the optimal subsidy or tax rate. This model is calibrated to a typical German …

high availability. Moreover, the subsidy scheme is substantially more complex than a first-best Pigouvian tax. The optimal … renewable subsidy is always positive but tends to decrease as electricity production becomes less reliant on fossils. The … optimal storage subsidy even changes its sign. It is usually negative as long as fossils contribute to filling the storage …