http://dx.doi.org/10.1016/j.jeem.2011.05.002
Enacting market-based environmental regulation, such as emissions taxes and cap-and-trade programs, often create rents that are contested by agents. In this paper, we create a framework that compares social welfare from alternative market-based environmental policy instruments under the presence of rent seeking. We show that, contrary to the commonly held view, non-revenue-raising instruments (NRRIs) are in many cases preferable over revenue-raising instruments (RRIs). We find that the choice of instrument depends on the size of a potential revenue-recycling effect and the level of preassigned rents."
by Ian A., MacKenzie a and Markus, Ohndorfb
a Center of Economic Research, ETH Zürich, Zürichbergstrasse 18, 8092 Zürich, Switzerland
b Institute for Environmental Decisions, ETH Zürich, Weinbergstrasse 35, 8092 Zurich, Switzerland
Journal of Environmental Economics and Management via Elsevier Science Direct www.ScienceDirect.com
In Press, Accepted Manuscript; Available online May 27, 2011
Keywords: Cap-and-trade; Environmental tax; Rent seeking
Enacting market-based environmental regulation, such as emissions taxes and cap-and-trade programs, often create rents that are contested by agents. In this paper, we create a framework that compares social welfare from alternative market-based environmental policy instruments under the presence of rent seeking. We show that, contrary to the commonly held view, non-revenue-raising instruments (NRRIs) are in many cases preferable over revenue-raising instruments (RRIs). We find that the choice of instrument depends on the size of a potential revenue-recycling effect and the level of preassigned rents."
by Ian A., MacKenzie a and Markus, Ohndorfb
a Center of Economic Research, ETH Zürich, Zürichbergstrasse 18, 8092 Zürich, Switzerland
b Institute for Environmental Decisions, ETH Zürich, Weinbergstrasse 35, 8092 Zurich, Switzerland
Journal of Environmental Economics and Management via Elsevier Science Direct www.ScienceDirect.com
In Press, Accepted Manuscript; Available online May 27, 2011
Keywords: Cap-and-trade; Environmental tax; Rent seeking
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