The Case for a Carbon Tax: Getting Past Our Hang-Ups to Effective Climate Policy PDF
Preview The Case for a Carbon Tax: Getting Past Our Hang-Ups to Effective Climate Policy
the case for a carbon tax The Case for a Carbon Tax getting past our hang-ups to effective climate policy Shi-Ling Hsu Washington|Covelo|London Copyright©2011Shi-LingHsu AllrightsreservedunderInternationalandPan-AmericanCopyrightConventions.Nopart ofthisbookmaybereproducedinanyformorbyanymeanswithoutpermissionin writingfromthepublisher:IslandPress,1718ConnecticutAve.,NW,Suite300 Washington,DC20009. ISLANDPRESSisatrademarkoftheCenterforResourceEconomics. LibraryofCongressCataloging-in-PublicationData Hsu,Shi-Ling. Thecaseforacarbontax:gettingpastourhang-upstoeffectiveclimatepolicy/ Shi-LingHsu.—1sted. p.cm. Includesbibliographicalreferencesandindex. ISBN-13:978-1-59726-531-7(cloth:alk.paper) ISBN-10:1-59726-531-4(cloth:alk.paper) ISBN-13:978-1-59726-533-1(pbk.:alk.paper) ISBN-10:1-59726-533-0(pbk.:alk.paper) 1. Carbontaxes.2. Climaticchanges— Governmentpolicy. I.Title. HJ5316.H782011 363.738′746—dc23 2011014901 Printedonrecycled,acid-freepaper ManufacturedintheUnitedStatesofAmerica 10 9 8 7 6 5 4 3 2 1 Keywords:climatechange,environmentalpolicy,cap-and-trade,energysubsidies,renewable energy,KyotoProtocol,greenhousegasemissions,globalwarming,environmental economics,SternReport For my children, Katharine and Allen contents Acknowledgments xi Chapter1 Introduction 1 Chapter2 ClimateChangePolicyAlternatives 13 CarbonTaxes 15 Command-and-ControlRegulation 17 Cap-and-Trade 20 GovernmentSubsidies 23 Chapter3 TenArgumentsforaCarbonTax 25 One:EconomicEfficiency 27 Two:ExcessiveFormationofCapital 41 Three:Non-InterferencewithOtherRegulatory InstrumentsorJurisdictions 46 Four:GovernmentIsBetteratReducing“Bads”Than Increasing“Goods” 53 Five:IncentivesforInnovation—PriceEffects 65 Six:IncentivesforInnovation—PriceBreadth 77 Seven:Administrability 84 Eight:InternationalCoordination 90 Nine:RevenueRaising 101 Ten:EconomicEfficiencyRevisited:Pricesversus QuantitiesunderUncertainty 104 Conclusion 115 Chapter4 ArgumentsagainstaCarbonTax 117 PoliticalEconomyConsiderations 118 Regressiveness 124 Ineffectiveness 138 CrowdingOut 143 Conclusion 145 Chapter5 CarbonTaxPsychology 147 The“DoNoHarm”Effect 152 TheIdentifiabilityEffect 163 TheEndowmentEffect 170 Conclusion 179 Chapter6 ChangingPoliticalFortunes? 181 Chapter7 Conclusion 191 Endnotes 195 Index 223
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