Political Market Instruments : A Comparative and Prospective Analysis

This paper, after comparing the tax-and-subsidy and cap-and-trade approaches to internalizing externalities (particularly in the context of carbon taxes v. carbon markets), and briefly surveying former, existing and proposed tradable regulatory instruments, explores the possible future of public-goods-production or public-bads-abatement markets, contemplating the potential for a far broader role for Political Market Instruments (PMIs), while recognizing the enormity of the technical challenges involved in making such extensive regulatory markets a viable social institutional innovation