ECON 381 Lecture Notes - Lecture 5: Market Structure, Cif, Carbon Trust
Document Summary
There are a variety of policy instruments that could be used to tackle an environmental problem. To inform a policy choice one needs to (among other things) compare the economic costs and consequences, short term and long term, of each. Suppose our objective is to reduce emissions of a particular pollutant (say so2) in order to improve environmental quality. (among other sources, so2 is emitted by burning coal as an input to generate electricity and contributes to acid rain) Our target level of reduction (or target level of environmental quality) could be chosen in many different ways . Suppose that the target level of emissions is e* (other choices?) Environmental economics october 19th: taxes on output (electricity), inputs (coal) or emissions, performance standards (permits) specifying permitted level of emissions, tradable permits issue permits allowing a fixed level of total emissions of. Make firms legally liable for damage caused by so2 emissions.