Re: green permits and taxes

[Rosser Jr, John Barkley]

Paul,
     Of course.  But then I and most on this list who have 
defended permits have done so not on the basis of free 
distribution or sale at below social cost.  Again, I would 
appreciate equivalent plans being compared, not an ideal 
non-existent tax plan with an actually-existing permit plan 
with all its flaws.  For such a comparison of course Robin 
is right and ideal taxes look better.
     Probably the bottom line on why permits might be 
better, even when flawed (the big challenge Robin issued) 
is indeed the catastrophe issue of a sudden increase in 
social cost.  Taxes can really mess up where permits might 
not.  Of course Robin simply dismissed this as "99% bull" 
and some kind of theoretical abstraction, but that is mere 
assertion, and given the existence of lots of 
nonlinearities and discontinuities in our 
ecological-economic system, one that is not easily 
defended.  Of course knowing where those cutoffs are is a 
problem under any system, social/political/economic, no 
matter what.  We need more information.
Barkley Rosser
On Tue, 03 Mar 98 09:08 CST [EMAIL PROTECTED] wrote:

> Barkely and Robin,
>   Correct me if I am off track here, but if permits are
> distributed free (based on some past pattern), or if they
> are initially priced below social cost, and then a
> tradeable permit market created, does this not act as
> a barrier to the entry of new firms who must buy up
> permits at full market price in order to produce?  Of
> course, if permits had to be bought up every 6 mos or
> year, that would tend to equalize the capital cost in
> subsequent periods but it would still be an extra entry
> cost for new firms.  This would not be the case for
> taxes.  Does this make sense?
> 
> Paul Phillips,
> Economics,
> University of Manitoba

-- 
Rosser Jr, John Barkley
[EMAIL PROTECTED]