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Nobel Laureate in Economics, Ex World Bank Chief Economist
Disagree
Of course, polluting industries like the cap-and-trade system. While it provides them an incentive not to pollute, emission allowances offset much of what they would have to pay under a tax system. Some firms can even make money off the deal. Moreover, Europe has grown used to the concept of cap-and-trade, and many are loathe to try an alternative. Yet, no one has proposed an acceptable set of principles for assigning emission rights.
Politics and Business Magazine
Disagree
With a cap-and-trade regime, where annual emissions are strictly capped, variation in these costs implies significant price volatility. It also forces the market to cut emissions at times when emission reduction costs are high. A carbon tax, on the other hand, would allow firms to cut emissions most when doing so is cheapest. This is a strong argument in favour of the overall efficiency advantages of a carbon tax. But there's more to the story than that. ...
Economics Professor
Disagree
A carbon tax would make price blame clearer, so [Democrats] are going with tradable permits, which also lets them play more favorites with who gets permits. Permits also make it harder to notice if they actually cut carbon, vs. preserving business as usual.
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