Effects of differentiating climate policy by sector : a United States example

Abstract

The experience of other environmental problems suggests that policies yielding uniform marginal costs across sectors, as most analyses assume, are not likely to be realized in practice. Some sectors will be favored over others, yielding different levels of control. Using the MIT Emissions Prediction and Policy Analysis Model, the national cost of such differentiation across sectors is shown to be very high. Moreover, because of interactions and feedbacks in the economy, measures that differentiate in this way may not even aid the sectors they are intended to protect.