Prices Versus Quantities

Policy Instruments in Environmental Law (Richards, K. and J. Van Zeben, eds.), Elgar, 2018

FSU College of Law, Public Law Research Paper No. 884

FSU College of Law, Law, Business & Economics Paper No. 18-5

16 Pages Posted: 12 Jul 2018

See all articles by Shi-Ling Hsu

Shi-Ling Hsu

Florida State University - College of Law

Date Written: May 22, 2018

Abstract

Within the world of market mechanisms, two parallel ideas have been formative in the developing discourse on environmental policy: a "price instrument" through a Pigouvian tax, and a "quantity instrument" through a Dalesian emissions trading instrument. Over time, these simple theoretical ideas have developed variants out of political and administrative necessity, which have blurred distinctions and sometimes detracted from the environmental and economic advantages of market mechanisms. That said, a juxtaposition of price instruments with quantity instruments is useful for comparing the administrative and welfare implications. This chapter reviews the relative advantages and disadvantages of price and quantity instruments, with a special concern for climate policy.

Keywords: carbon pricing, carbon tax, cap-and-trade, climate policy

Suggested Citation

Hsu, Shi-Ling, Prices Versus Quantities (May 22, 2018). Policy Instruments in Environmental Law (Richards, K. and J. Van Zeben, eds.), Elgar, 2018; FSU College of Law, Public Law Research Paper No. 884; FSU College of Law, Law, Business & Economics Paper No. 18-5. Available at SSRN: https://ssrn.com/abstract=3183441 or http://dx.doi.org/10.2139/ssrn.3183441

Shi-Ling Hsu (Contact Author)

Florida State University - College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States

HOME PAGE: http://myweb.fsu.edu/shsu/

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