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Hsiao-chi Chen and Shi-miin Liu
''Environmental efficiency of price and quantity policies''
( 2018, Vol. 38 No.3 )
Under the set-up of Weitzman (1974), we examine the relative environmental efficiency of price (i.e., emission tax) and quantity (i.e., emission cap) policies given the expected net benefits of emissions no less than some fixed value. We discover that quantity policies are more environmentally efficient than price policies regardless of relative steepness of emissions' marginal benefit and marginal cost functions. However, if the constraint of minimum expected net benefits of emissions is not considered, both price and quantity policies are equally efficient.
Keywords: environmental efficiency, emission cap, emission tax.
JEL: Q5 - Environmental Economics: General
Manuscript Received : Nov 30 2017 Manuscript Accepted : Aug 05 2018

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