Prices vs. Quantities: The Irrelevance of Irreversibility
AbstractWe explore the efficacy of price and quantity controls in a dynamic setup in which the decisions of some agents are irreversible. The assumption of irreversibility is shown to improve the performance of a tax relative to that of a system of tradable quotas and significantly alter the equilibrium behavior of agents. We nevertheless conclude that taking into account the fact that agents' decisions may be irreversible does not lead to policy implications significantly different from those reached in a simpler model in which irreversibility is ignored. Copyright The editors of the "Scandinavian Journal of Economics", 2004 .
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The Scandinavian Journal of Economics.
Volume (Year): 106 (2004)
Issue (Month): 4 (December)
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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442
Other versions of this item:
- Baldursson, F.M. & von der Fehr, N.-H. M., 1998. "Prices vs Quantities: The Irrelevance of Irreversibility," Memorandum 09/1998, Oslo University, Department of Economics.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D9 - Microeconomics - - Intertemporal Choice
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
- Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
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- Michael Grubb, 2007. "The European Emissions Trading Scheme: An Overview of Operations and Lessons," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 5(4), pages 17-25, 06.
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