Taxing Cap and Trade Environmental Regulation

Posted: 31 Aug 2007

See all articles by Ethan Yale

Ethan Yale

University of Virginia School of Law


This paper examines the extent to which income taxation interferes with cap-and-trade environmental regulation, and reaches two conclusions. First, within a single tax period, imposing an income tax will not undermine the cost-effectiveness of cap-and-trade regulation. Second, taxes may distort cost-effective allocation of permits and abatement through time when the permit market is dominated by firms owning permits with a tax basis of zero.

Keywords: cap and trade regulation, tax law, tax policy, envioronmental policy

JEL Classification: K23, K32, K34, Q28

Suggested Citation

Yale, Ethan, Taxing Cap and Trade Environmental Regulation. Journal of Legal Studies, Forthcoming, Georgetown Law and Economics Research Paper No. 1010713, Available at SSRN:

Ethan Yale (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics