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Cap-and-trade systems offer more directly defined caps. If you have confidence about how much of something is "correct", a cap-and-trade regime can just set it

by YokoZar 11y ago

Cap-and-trade systems offer more directly defined caps. If you have confidence about how much of something is "correct", a cap-and-trade regime can just set its cap to that amount and let the price be whatever it may be. Cap-and-trade also has the advantage of being sometimes politically easier to implement as the status quo -- just set the cap to whatever current usage is, hand out credits to whoever is currently using the resource, and then no current stakeholder loses as a result of turning on the policy. Taxes, by contrast, require some amount of tweaking the tax every time you think the resource is being overconsumed. Even if there's political consensus to do something now, there's a very real danger of undershooting, the resource being still overconsumed in the future, but the political will to raise the tax again no longer being present (example: imaging trying to raise consumer gas taxes in the US today). Both regulations have the same basic goals -- raise the price of the thing to reduce usage, maybe collect some revenue in the process. Which regulation makes more sense depends a bit on the political reality (and future reality), and the relative diffculty of administering a tax vs a cap. It depends on context.

Scoundreller 11y ago
> hand out credits to whoever is currently using the resource Sounds like the IPv4 allocation system. I agree it's politically palatable, but if a nation is going to distribute a good, it's more sensible to allocate an even chunk to every resident/citizen, and have them get paid for its usage.
deleted 11y ago
[deleted]
ZeroGravitas 11y ago
Your criticisms of a carbon tax seem to apply directly to cap-and-trade if the incorrect amount is chosen. Later governments can change the cap upwards or accelerate it's downward descent too, and may well need to if the science changes or other governments do nothing. And if you want to hand billions in tax credits to current carbon polluters so they don't fight the tax, you can do that with a carbon tax too. I'd actually recommend doing this for ordinary people, so that you don't hurt people with current high-carbon lifestyles too much, but still offer an incentive to save carbon/money, possibly a phase in would be required as is generally proposed for cap and trade. I'm also wondering how a carbon cap and trade system could be effective and yet not result in a raise in gas prices in the US? That's surely the whole point?
- SilasX 11y ago
  >Your criticisms of a carbon tax seem to apply directly to cap-and-trade if the incorrect amount is chosen. Later governments can change the cap upwards or accelerate it's downward descent too, and may well need to if the science changes or other governments do nothing. In fairness, this can be a lot more difficult politically than raising or lowering a tax. Compare: "Oh jeez, if we don't issue enough taxi medallions, we can just issue more later, or remove the requirement altoghether." (And have people who bought them scream bloody murder.)

by YokoZar 11y ago

Scoundreller 11y ago

> hand out credits to whoever is currently using the resource Sounds like the IPv4 allocation system. I agree it's politically palatable, but if a nation is going to distribute a good, it's more sensible to allocate an even chunk to every resident/citizen, and have them get paid for its usage.

deleted 11y ago

[deleted]

ZeroGravitas 11y ago

Your criticisms of a carbon tax seem to apply directly to cap-and-trade if the incorrect amount is chosen. Later governments can change the cap upwards or accelerate it's downward descent too, and may well need to if the science changes or other governments do nothing. And if you want to hand billions in tax credits to current carbon polluters so they don't fight the tax, you can do that with a carbon tax too. I'd actually recommend doing this for ordinary people, so that you don't hurt people with current high-carbon lifestyles too much, but still offer an incentive to save carbon/money, possibly a phase in would be required as is generally proposed for cap and trade. I'm also wondering how a carbon cap and trade system could be effective and yet not result in a raise in gas prices in the US? That's surely the whole point?

SilasX 11y ago
>Your criticisms of a carbon tax seem to apply directly to cap-and-trade if the incorrect amount is chosen. Later governments can change the cap upwards or accelerate it's downward descent too, and may well need to if the science changes or other governments do nothing. In fairness, this can be a lot more difficult politically than raising or lowering a tax. Compare: "Oh jeez, if we don't issue enough taxi medallions, we can just issue more later, or remove the requirement altoghether." (And have people who bought them scream bloody murder.)