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The price vs quantity debate: climate policy and the role of business cycles

Abstract:

What is the optimal instrument design and choice for a regulator attempting to control emissions by private agents in face of uncertainty arising from business cycles? In applying Weitzman's result [Prices vs. quantities, Review of Economic Studies, 41 (1974), 477-491] to the problem of greenhouse gas emissions, the price-quantity literature has shown that, under uncertainty about abatement costs, price instruments (carbon taxes) are preferred to quantity restrictions (caps on emission), sinc...

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Publication status:
Published

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Publisher:
University of Oxford
Series:
OxCarre Papers
Publication date:
2014-05-27
Paper number:
137
Keywords:
Pubs id:
1143699
Local pid:
pubs:1143699
Deposit date:
2020-12-15

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