Markets versus Regulation: The Efficiency and Distributional Impacts of U.S. Climate Policy Proposals
Name
Karplus_Markets versus.pdf
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4.13 MB
Format
Adobe PDF
Checksum (MD5)
7649fbde639af8960743b4943c53889a
Author(s)
Rausch, Sebastian
Karplus, Valerie Jean
Date Issued
September 2014
Journal
The Energy Journal
Publisher
International Association for Energy Economics (IAEE)
Citation
Rausch, Sebastian, and Valerie J. Karplus. “Markets Versus Regulation: The Efficiency and Distributional Impacts of U.S. Climate Policy Proposals.” The Energy Journal 35, no. 01 (September 1, 2014).
Version
Author's final manuscript
Abstract
Regulatory measures have proven the favored approach to climate change mitigation in the U.S., while market-based policies have gained little traction. Using a model that resolves the U.S. economy by region, income category, and sector-specific technology deployment opportunities, this paper studies the magnitude and distribution of economic impacts under regulatory versus market-based approaches. We quantify heterogeneity in the national response to regulatory policies, including a fuel economy standard and a clean or renewable electricity standard, and compare these to a cap-and-trade system targeting carbon dioxide or all greenhouse gases. We find that the regulatory policies substantially exceed the cost of a cap-and-trade system at the national level. We further show that the regulatory policies yield large cost disparities across regions and income groups, which are exaggerated by the difficulty of implementing revenue recycling provisions under regulatory policy designs.
MIT Department
Massachusetts Institute of Technology. Joint Program on the Science & Policy of Global Change
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.5547/01956574.35.SI1.11
