Resources for the Future
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NBER Working Papers and Publications
|March 1998||The Cost-Effectiveness of Alternative Instruments for Environmental Protection in a Second-Best Setting|
with Lawrence H. Goulder, Ian W. H. Parry, Roberton C. Williams III: w6464
This paper uses analytical and numerical general equilibrium models to study the costs of achieving pollution reductions under a range of environmental policy instruments in a second-best setting with pre-existing factor taxes. We compare the costs and efficiency impacts of emissions taxes, emissions quotas, fuels taxes, performance standards, and mandated technologies, and explore how costs change with the magnitude of pre-existing taxes and the extent of pollution abatement. We find that the presence of distortionary taxes raises the costs of pollution abatement under each instrument relative to its costs in a first-best world. This extra cost is an increasing function of the magnitude of pre-existing tax rates. For plausible values of pre-existing tax rates and other parameters, the co...
Published: Goulder, Lawrence H., Ian W. H. Parry, Roberton C. Williams, III and Dallas Burtraw. "The Cost-Effectiveness Of Alternative Instruments For Environmental Protection In A Second-Best Setting," Journal of Public Economics, 1999, v72(3,Jun), 329-360. citation courtesy of
|June 1996||Revenue-Raising vs. Other Approaches to Environmental Protection: The Critical Significance of Pre-Existing Tax Distortions|
with Lawrence H. Goulder, Ian W. H. Parry: w5641
This paper examines the choice between revenue-raising and non-revenue-raising instruments for environmental protection in a second-best setting with pre- existing factor taxes. We find that interactions with pre-existing taxes influence the costs of regulation and seriously militate against pollution abatement policies that do not raise revenue. If the marginal environmental benefits from pollution reductions are below a certain threshold value, any amount of pollution abatement through non-revenue-raising (NRR) policies like emissions quotas is efficiency-reducing. Under conditions approximating S02 emissions from electric power plants in the U.S., efficiency gains vanish if marginal environmental benefits are below $109 per ton and an NRR policy is employed. These results are largel...
Published: Goulder, Lawrence H., Ian W. H. Parry and Dallas Burtraw. "Revenue-Raising Versus Other Approaches To Environmental Protection: The Critical Significance Of Preexisting Tax Distortions," Rand Journal of Economics, 1997, v28(4,Winter), 708-731.