Efficiency Costs of Meeting Industry-Distributional Constraints Under Environmental Permits and Taxes
AbstractMany pollution-related industries have political influence sufficient to block policies that would harm their profits. A politically realistic approach to environmental policy seems to require avoiding significant profit-losses to these industries. Using analytically and numerically solved equilibrium models,we examine how the efficiency costs of emissions permits and tax policies change when the policies are designed to insulate profits. The relative increase in efficiency cost associated with protecting profits is highly sensitive to the extent of pollution abatement. Expanded opportunities for end-of-pipe treatment of pollution reduce the absolute efficiency costs of abatement policies, but have little impact on the relative increase in efficiency costs attributable to the constraint on profits.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 36 (2005)
Issue (Month): 4 (Winter)
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Web page: http://www.rje.org
Other versions of this item:
- A.L. Bovenberg & Lawrence H. Goulder & Derek J. Gurney, 2003. "Efficiency Costs of Meeting Industry-Distributional Constraints under Environmental Permits and Taxes," NBER Working Papers 10059, National Bureau of Economic Research, Inc.
- Bovenberg, A.L. & Goulder, L.H. & Gurney, D.J., 2003. "Efficiency Costs of Meeting Industry-Distributional Constraints under Environmental Permits and Taxes," Discussion Paper 2003-86, Tilburg University, Center for Economic Research.
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
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