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It is widely believed that an environmental tax (price regulation) and cap-and-trade (quantity regulation) are equally …. Emissions are lower and material welfare is higher with price regulation. Furthermore, quantity regulation gives rise to … to reduce pollution, while price regulation makes these efforts effective. …
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It is widely believed that an environmental tax (price regulation) and cap-and-trade (quantity regulation) are equally …. Emissions are lower and material welfare is higher with price regulation. Furthermore, quantity regulation gives rise to … to reduce pollution, while price regulation makes these efforts effective. …
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We consider the problem of reducing the carbon emissions of a set of firms over a finite horizon. A regulator dynamically allocates emission allowances to each firm. Firms face idiosyncratic as well as common economic shocks on emissions, and have linear quadratic abatement costs. Firms can...
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: Our results help to understand the pros and cons of each regulatory tool and provide guidance for regulation across …
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