Tradable Permit Tariffs: How Local Air Pollution Affects Carbon Emissions Permit Trading

摘要: Recent literature on greenhouse gas controls shows the costs of climate protection can be offset by ancillary benefits generated from lower local air pollution. We show here that such imply unfettered price carbon emissions permits observed in tradable permit markets might significantly exceed incremental social cost controlling emissions. This difference help to justify market interventions as an import tariff traded internationally. Uncertainty about nature pollution regulation and variabilityandmagnitudeofancillarybenefitsmaycomplicate substantially design cost-effective policies.