@article{Pezzey:95049,
      recid = {95049},
      author = {Pezzey, John C.V. and Jotzo, Frank},
      title = {Tax-Versus-Trading and Free Emission Shares as Issues for  Climate Policy Design},
      address = {2010-09},
      number = {448-2016-33927},
      series = {Environmental Economics Research Hub Research Reports},
      pages = {42},
      year = {2010},
      abstract = {We give empirical welfare results for global greenhouse  gas emission control, using the first multiparty
model to  combine tax-versus-trading under uncertainties with revenue  recycling. Including
multiple parties greatly reduces the  welfare advantage of an emissions tax
over emissions  (permit) trading in handling abatement-cost uncertainties,  from that shown by
existing, single-party literature. But a  tax has a different, much bigger advantage, from  better
handling uncertainties in business-as-usual  emissions. Either mechanism's free emissions share,
from  tax thresholds or free permits, which lowers its possible  welfare gain from revenue recycling,
may however dominate  any tax-versus-trading advantage. Moreover, political and  practical
constraints, such as the political  unacceptability of no free emissions, the institutional  unavailability
of efficient emissions tax thresholds, and  the unpopularity of recycling revenue as conventional  tax
cuts, make ideal welfare maximisation a poor guide for  mechanism choice; and at optimal prices,
trading currently  tends to outperform taxation.},
      url = {http://ageconsearch.umn.edu/record/95049},
      doi = {https://doi.org/10.22004/ag.econ.95049},
}