The Distributional Effects of Carbon Regulation: Why Auctioned Carbon Permits are Attractive and Feasible
We examine the distributional effects of carbon regulation. An auction of carbon permits is the best way to achieve carbon caps set by international negotiation to limit global climate change. An auction is preferred to grandfathering (giving polluters permits in proportion to past pollution), because it allows reduced tax distortions, provides more flexibility in distribution of costs, provides greater incentives for innovation, and reduces the need for politically contentious arguments over the allocation of rents.
|Date of creation:||1999|
|Date of revision:||Feb 1998|
|Publication status:||Published in Thomas Sterner, ed., The Market and the Environment, Cheltenham, United Kingdom: Edward Elgar, chapter 12, 1999.|
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