Cap And Trade

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A very successful "deregulation" strategy that replaces government regulation and Pigouvian taxes on harmful externalities with government-limited, salable rights to externalities. In other words, government power can create markets and use market mechanisms. This brings market efficiency to regulation; thus businesses hate cap and trade.

Links

NEW 9/09/2017: Learning from Thirty Years of Experience with Cap-and-Trade Systems [More...]
"Based on the numerous specific lessons we identified in our analysis, several design and implementation features of cap-and-trade programs appear critical to their performance."
The Cap-and-Trade Sulfur Dioxide Allowances Market Experiment [More...]
"The Acid Rain Program led to higher levels of premature mortality than would have occurred under a hypothetical no-trade counterfactual with the same overall sulfur dioxide emissions." Because the medical externalities of Eastern pollution are higher than Western pollution, but that is not properly priced.
The Rise and Fall of Cap-and-Trade [More...]
"The problem is not that cap and trade is a theoretical proposal from ivory-tower economists that cannot survive application in the real world. To the contrary, its performance in action surpassed expectations..."

Quotations

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