This paper empirically studies how emission pricing affects capital replacement and adoption of embodied environmental technology. A pricing policy encourages firms to accelerate retirement of old capital assets and replace them with newer more efficient assets, but this may crowd out...

The separability between efficiency and equity is an underlying assumption in most computable general equilibrium (CGE) models used to assess the costs of carbon abatement. Chichilnisky and Heal (1994) have generated a debate on both the analytical correctness of this hypothesis as well as its...

New York is considering additional emission regulation on top of its obligations under the Regional Greenhouse Gas Initiative (RGGI) to achieve its State Energy Plan targets. The proposed measure is a so-called "carbon adder" on CO2 emissions from the power sector which is set as the difference...

Economic thought on climate policy as an instance of environmental regulation is strongly influenced by the principle of a uniform carbon price. Economists acknowledge that this principle breaks down in a second-best world with other distortions, such as taxes and market power in domestic and...

Emissions regulations like carbon pricing raise the price of covered sector goods and thus can interact with and exacerbate other preexisting distortions in the economy. One such distortion is labor taxes. Another is emissions "leakage" due to the lack of comparable emissions pricing abroad or...

In our analytical general equilibrium model where two polluting inputs can be substitutes or complements in production, we study the effects of a tax on one pollutant in two cases: one where both pollutants face taxes and the second where the other pollutant is subject to a permit policy. In...