Under asymmetric information between firms and a regulator, intertemporal trade of pollution permits can increase welfare relative to both emissions taxes and cap and trade (quotas). In the subgame perfect equilibrium, banking and borrowing dominates taxes and quotas for a large region of...

This paper examines the efficacy of carbon tax policies in view of the interactions between such policies and the firm’s carbon efficiency and financing decisions. We show that because the government, unlike capital markets, does not price its policy’s risk by taking into account default...

We introduce a "smart" cap and trade system that eliminates the welfare costs of asymmetric information (“uncertainty”). This cap responds endogenously to technology or macroeconomic shocks, relying on the market price of certificates to aggregate information. It allows policy makers to...

"Prices versus quantities" (Weitzman 1974), a hugely influential paper, is widely cited (and taught) in current debates about the best policy to reduce greenhouse gas emissions. The paper's criterion for ranking policies suggests that technological uncertainty favors taxes over cap and trade....

Whether or not the federal government should price carbon continues to be debated. There were several scholarly pieces examining the relative advantages and disadvantages of cap and trade v. a carbon tax at the time of Congressional Debate on the American Clean Energy and Security Act in 2010....

Why do some governments adopt policies to mitigate climate change while others do not? In this study, I illustrate the importance of industrial organization in shaping prospects for climate mitigation policy. Using a generalized difference-in-differences analysis, I show that U.S. states that...