Abstract: This article provides the main insights into the debate on instrument choice between price and quantity control instruments for emissions control. Price control refers to the emission taxes or charges. Quantity control mainly refers to the cap and trade. The focus within this theme is on imperfect information about abatement costs, resulting in the prominent Weitzman theorem. This article also shows the different functioning of quantity (cap and trade) and price control under imperfect information about the (marginal) abatement costs. Furthermore, this article portrays the most important hybrid instruments, notably nonlinear taxes; combinations of emission taxes, tradable permits, and subsidies on abatement; and increasing supply curves for tradable permits. Finally, it outlines other economic circumstances under which price control and quantity control perform differently. Among these, this article discusses imperfect competition, incentives for technology adoption and innovation, international trade and transboundary pollution, incomplete enforcement, interaction of emissions control with other policy instruments, and, finally, political economic issues. While this article discusses the issue of price-versus-quantity control under imperfect information in detail, other topics are treated in a survey manner.
Publication Year: 2013
Publication Date: 2013-01-01
Language: en
Type: book-chapter
Indexed In: ['crossref']
Access and Citation
Cited By Count: 11
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot