tag:blogger.com,1999:blog-4748060798655400108.post46816030280347718..comments2023-11-02T08:55:35.510-07:00Comments on Market Design: Europe's first auction of carbon emissions permitsAl Rothhttp://www.blogger.com/profile/02232854038397912604noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-4748060798655400108.post-82927111305621659002008-11-19T20:50:00.000-08:002008-11-19T20:50:00.000-08:00Interestingly, The Economist (another London-based...Interestingly, <A HREF="http://www.economist.com/opinion/displaystory.cfm?story_id=12562343" REL="nofollow">The Economist</A> (another London-based publication) just recently advocated in favor of a "green tax."<BR/><BR/>Indeed, a "green tax" (or rather, "non-green tax," since firms are "taxed" for polluting) should have greening effects so long as the rates are set efficiently.<BR/><BR/>A firm is induced to adopt green technology if its cost of greening is less than <BR/>(1) the market price of a permit and<BR/>(2) the fine associated with not having a permit. Since the firms are heterogeneous (they are not all cement companies) the auction should set a price above some firms' green-ceilings. The real burden is upon The Government to set and enforce efficient fines.Scotthttps://www.blogger.com/profile/03439136666108847579noreply@blogger.com