Policy Choice
Slides [link]Lecture 1
Chosing between policies
Required
- Read KO:
- pages 160-167 (revenue and uncertainty)
- pages 180-184 (innovation and dynamics)
- pages 189-198 (other considerations)
- Optional: (but recommended), read Meredith Fowlie’s blog post on the tension between environmental justice advocates and cap-and-trade in California
Response questions
- What is one additional reason to use market based instruments for environmental policy, aside from from cost-effectiveness?
- What are pollution “hot-spots”? How do hot-spots relate to the choice to use market based environmental policy?
Key Points
- Additional benefits of incentive based instruments include innovation and public revenue
- Categorizing pollutants -- stock vs flow; uniformly mixing vs not
- Hot spots and environmental justice may favor more prescriptive measures.