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Environmental efficiency of price and quantity policies

Author

Listed:
  • Hsiao-chi Chen

    (Department of Economics, National Taipei University)

  • Shi-miin Liu

    (Department of Economics, National Taipei University)

Abstract

Under the set-up of Weitzman (1974), we examine the relative environmental efficiency of price (i.e., emission tax) and quantity (i.e., emission cap) policies given the expected net benefits of emissions no less than some fixed value. We discover that quantity policies are more environmentally efficient than price policies regardless of relative steepness of emissions' marginal benefit and marginal cost functions. However, if the constraint of minimum expected net benefits of emissions is not considered, both price and quantity policies are equally efficient.

Suggested Citation

  • Hsiao-chi Chen & Shi-miin Liu, 2018. "Environmental efficiency of price and quantity policies," Economics Bulletin, AccessEcon, vol. 38(3), pages 1514-1522.
    • Handle: RePEc:ebl:ecbull:eb-17-00944
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    environmental efficiency; emission cap; emission tax.;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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