Goulder, Lawrence H.; Parry, Ian W. H.; Williams, … - 2021
costs in a first-best world. This extra cost is an increasing function of the magnitude of pre-existing tax rates. For … plausible values of pre-existing tax rates and other parameters, the cost increase for all policies is substantial (35 % or more …). The impact of pre-existing taxes is large for non-auctioned emissions quotas, the cost increase can be several hundred …