Emission Tax or Standard? The Role of Productivity Dispersion

Li, Zhe; Shi, Shouyong

doi:10.2139/ssrn.1694693

Cited by 9 publications

(7 citation statements)

References 19 publications

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“…man (1974); Buchanan (1969); Li and Shi (2010) and Li and Sun (2015) 3 with j ∈ {c, d} and α ∈ (0, 1), A jit is the productivity of machine i in sector j and x jit is the quantity of such machine. e aggregate productivity of the two sectors is de ned as:…”

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confidence: 99%

Preventing Environmental Disasters: Market-Based vs. Command-and-Control Policies

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. we nd that command-and-control interventions guarantee policy e ectiveness irrespectively on the timing of their introduction. As command-and-control policies are always able to direct technical change toward "green" technologies and to prevent climate disasters, they constitute a valuable alternative to market-based interventions. Terms of use: Documents inJEL: O33, O44, Q30, Q54, Q56, Q58

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confidence: 99%

Preventing Environmental Disasters: Market-Based vs. Command-and-Control Policies

2015

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“…5. Sadeghzadeh (2014) modifies Li and Shi (2010), an early version of the current paper, to study the impact of environmental policies on productivity and competition. With free entry and exit, the main focus of Sadeghzadeh's paper is on how policies affect a cutoff on firm productivity that determines the number of entrants, which in turn determines the average productivity of firms and market concentration.…”

Section: Resultsmentioning

confidence: 99%

Emission Taxes and Standards in a General Equilibrium With Productivity Dispersion and Abatement

Shi

2016

Macroecon. Dynam.

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We incorporate emission into a general equilibrium model with rich dispersion in productivity among monopolistically competitive plants. Emission is modeled as a by-product of goods production. An abatement technology is available to the plants for reducing emission. We compare an emission tax with an emission intensity standard. The tax is shown to dominate the standard in welfare for all values of market power if either productivity is sufficiently dispersed or the abatement technology is not effective. On the other hand, if productivity dispersion is small and the abatement technology is effective, there exists sufficiently strong market power so that the standard will dominate the tax in welfare. Even in the case where the standard unambiguously induces a higher output of dirty goods than the tax, the general equilibrium framework is necessary for ranking the two policies in welfare.

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“…Many studies have compared the effects of M-B and C&C policies [see (Hepburn, 2006), for an extensive comparison of environmental and climate policies]. Buchanan (1969); Li and Shi (2010), and Li and Sun (2015) emphasize the drawbacks of marked-based instruments and support the use of regulation. 2 The same conclusion is suggested by recent empirical evidences [see, e.g., Lee et al (2011) and Shapiro and Walker (2015)].…”

Section: Literature Reviewmentioning

confidence: 99%

Green Transitions and the Prevention of Environmental Disasters: Market-Based vs. Command-and-Control Policies

2019

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The paper compares the effects of market-based (M-B) and command-and-control (C&C) climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on a model of endogenous growth and directed technical change, we show that M-B policies (carbon taxes and subsidies toward clean sectors) suffer from path dependence and exhibit bounded window of opportunities: delays in their implementation make them ineffective both in redirecting technical change, (i.e. triggering a transition toward clean energy) and in avoiding environmental catastrophes. On the contrary, we find that C&C interventions are favored by path dependence and guarantee policy effectiveness irrespectively of the timing of their introduction. As the hypothesis of path dependence in technological change has received vast empirical support and it is a key feature of many models of growth, we argue that C&C policies should be seen as a valuable and non-equivalent alternative to M-B interventions.

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Emission Tax or Standard? The Role of Productivity Dispersion

Cited by 9 publications

References 19 publications

Preventing Environmental Disasters: Market-Based vs. Command-and-Control Policies

Preventing Environmental Disasters: Market-Based vs. Command-and-Control Policies

Emission Taxes and Standards in a General Equilibrium With Productivity Dispersion and Abatement

Green Transitions and the Prevention of Environmental Disasters: Market-Based vs. Command-and-Control Policies

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