Authorities often lack information for efficient regulation of the commons. This paper derives a criterion comparing … prices versus tradable quantities in terms of expected welfare, given uncertainty, optimal policy and endogenous cost … structure. I show that one cannot determine which regulatory instrument that induces the highest expected welfare based on the …

technology choice is endogenous, given that regulation is designed to induce equal expected aggregate emissions. Moreover, either … encourages the most flexibility if and only if abatement costs and the equilibrium permit price have sufficiently strong positive … covariance compared with the variance in the price on the good produced. …

under uncertainty. A tax encourages the most flexible technology if and only if stochastic costs and the equilibrium permit … price have sufficiently strong positive covariance, compared with the variance in consumer demand for the good produced …

Authorities often lack information for efficient regulation of the commons. This paper derives a criterion comparing … prices versus tradable quantities in terms of expected welfare, given uncertainty, optimal policy and endogenous cost … structure. I show that one cannot determine which regulatory instrument that induces the highest expected welfare based on the …

under uncertainty. It is shown that, from an efficiency point of view, it is generally preferable to divide the economy into … these regulation mechanisms. This may be so even when the latter alternatives are cost effective while the former is not …

several previous studies of price and quantity controls for climate change that do not adequately capture the dynamic …On efficiency grounds, the economics community has to date tended to emphasize price-based policies to address climate … change -- such as taxes or a “safety-valve” price ceiling for cap-and-trade -— while environmental advocates have sought a …

through a trading scheme, stand in contrast to taxes being the preferable policy instrument. The present paper addresses, by …

Environmental policy often has to be devised under informational constraints, like uncertainty and asymmetric … or a permit market. This serves as a screening device; the firms reveal private information by choosing an instrument. We … simple and thus easily implementable. The approach is also theoretically interesting, because the simultaneous use of price …

persistent over time and for uncertainty in next period's environmental policy. When pollution is non-persistent, we show that … regulatory uncertainty is inconsequential for output, pollution, or emission fees. However, when pollution is persistent, we find … pollution. We also measure the inefficiencies stemming from ignoring pollution persistence and from policy uncertainty …