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The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment

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dc.contributor.author Schmalensee, Richard
dc.contributor.author Stavins, Robert N.
dc.date.accessioned 2012-08-07T14:04:58Z
dc.date.available 2012-08-07T14:04:58Z
dc.date.issued 2012-08
dc.identifier.uri http://hdl.handle.net/1721.1/72007
dc.description.abstract Two decades have passed Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2 cap-and-trade system. That system performed well but created four striking ironies. First, by creating this system to reduce SO2 emissions to curb acid rain, the government did the right thing for the wrong reason. Second, a substantial source of this system’s cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, since this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2 market, demonstrating that what the government gives, the government can take away. since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2 cap-and-trade system. That system performed well but created four striking ironies. First, by creating this system to reduce SO2 emissions to curb acid rain, the government did the right thing for the wrong reason. Second, a substantial source of this system’s cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, since this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2 market, demonstrating that what the government gives, the government can take away. en_US
dc.language.iso en_US en_US
dc.publisher MIT CEEPR en_US
dc.relation.ispartofseries CEEPR Working Papers;2012-012
dc.rights An error occurred on the license name. en
dc.rights.uri An error occurred getting the license - uri. en
dc.title The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment en_US
dc.type Working Paper en_US
dc.identifier.citation CEEPR-WP-2012-012 en_US


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