Re: Green Permits and Taxes

[Rosser Jr, John Barkley]

Maggie,
    What about when there are both taxes and subsidies as 
we see in France and Germany?
     Actually when the major US environmental laws were put 
in place in the early 70s most of the profession advocated 
taxes, an idea dating back at least to Pigou.  This was 
rejected in favor of what are essentially command and 
control systems.  The politics was that pollution is "sin" 
and taxes would let people pay for sin, rather than 
outlawing it.  Of course the c and c system didn't outlaw 
it either, just dealt with it in a very arbitrary way.  
This predated the push for tradeable permits.
Barkley Rosser
On Wed, 25 Feb 1998 17:40:25 EST MScoleman 
<[EMAIL PROTECTED]> wrote:

> well, i WAS going to ignore this topic -- but, since I AM teaching micro (in
> addition to my technical work at that large utility) ....  According to Baumol
> and Blinder, taxing pollution cuts pollution more than subsidies or credits.
> The NEOCLASSICAL solution they propose is that subsidies increase the economic
> profits to firms and encourages them to produce more.  So even though they cut
> their emissions for the original production, they are all producing more and
> therefore producing more pollution throughout the entire industry.  Taxing, on
> the otherhand, decreases the budget with which the firm produces (shrinks the
> production possibilities curve).  Production per firm, and hence industry wide
> decreases, and so does pollution.
> 
> o.k.  i didn't say i agreed with this analysis.  this was just the first time
> i ever say a neoclassical solution which recommended taxation.
> 
> maggie coleman [EMAIL PROTECTED]
> 
> p.s. I think stringent state controls, up to and including jail time is the
> only method to stop pollution.

-- 
Rosser Jr, John Barkley
[EMAIL PROTECTED]