NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Marc A. C. Hafstead

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Working Papers

January 2014General Equilibrium Impacts of a Federal Clean Energy Standard
with Lawrence H. Goulder, Roberton C. Williams III: w19847
Economists have tended to view cap and trade (or, more generally, emissions pricing) as more cost-effective than a clean energy standard (CES) for the purpose of reducing greenhouse gas emissions associated with electricity generation. This stems in part from the finding that, in terms of cost-effectiveness, a CES relies too much on emissions abatement through the channel of fuel-switching and too little on the channel of reduced electricity demand. Recent research reveals, however, that the CES has an advantage over cap and trade in a different dimension. In a realistic economy with prior taxes on factors of production, the adverse “tax-interaction effect” is smaller under the CES than under the equivalent cap-and-trade program. This raises the possibility that the CES might not suffer a...
August 2009Impacts of Alternative Emissions Allowance Allocation Methods under a Federal Cap-and-Trade Program
with Lawrence H. Goulder, Michael S. Dworsky: w15293
This paper examines the implications of alternative allowance allocation designs under a federal cap-and-trade program to reduce emissions of greenhouse gases. We focus on the impacts on industry profits and overall economic output, employing a dynamic general equilibrium model of the U.S. economy. The model's unique treatment of capital dynamics permits close attention to profit impacts. We find that the effects on profits depend critically on the method of allowance allocation. Freely allocating fewer than 15 percent of the emissions allowances generally suffices to prevent profit losses among the eight industries that, without free allowances or other compensation, would suffer the largest percentage losses of profit. Freely allocating 100 percent of the allowances substantially ov...

Published: Impacts of Alternative Emissions Allowance Allocation Methods Under a Federal Cap-and-Trade Program Lawrence H. Goulder, Marc A.C. Hafstead, and Michael Dworsky Journal of Environmental Economics and Management | November 2010 | Vol. 60, No. 3 | pp. 161-181.

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