Abstract
In this chapter, the main instruments of environmental policy are considered. In particular, the advantages that price-based instruments, i.e. emission taxes and cap-and-trade systems, are expected to have over command-and-control approaches are described and the problems that may occur with emission pricing are illuminated. The chapter also refers to practical experiences that have been made with the application of price-based instruments and explains why – despite their basic advantages – these instruments have to be complemented by other measures.
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Notes
- 1.
According to the chain rule it holds for the derivative of a function f(x) = g(h(x)) that f′(x) = g′(h(x)) ⋅ h′(x).
- 2.
Except for the taxation of greenhouse gases.
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Buchholz, W., Rübbelke, D. (2019). A Comparison of Environmental Policy Instruments. In: Foundations of Environmental Economics. Springer Texts in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-16268-9_4
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