[ NTA logo ]

Distributional Effects of Carbon AllowanceTrading: How Government Decisions Determine Winners and Losers

Dinan, Terry and Rogers, Diane Lim

Abstract:

If the U.S. should limit CO2 emissions, an allowance trading policy may offer one method of achieving that goal in a cost-effective manner. The distributional effects of such a program could be large, far in excess of the actual cost to the economy. This paper examines how two key decisions that the government would need to make in designing a carbon trading program would determine those distributional effects. Those decisions are how to allocate the allowances and how to use the revenue that the government would receive under alternative allocation strategies. Distributional effects are estimated for both domestic and international trading programs.

Citation

Dinan, Terry and Rogers, Diane Lim (2002), Distributional Effects of Carbon AllowanceTrading: How Government Decisions Determine Winners and Losers, National Tax Journal, 55:2, pp. 199-221

DOI: dx.doi.org/10.17310/ntj.2002.2.01