When there is uncertainty about the marginal abatement cost curve,the flatter the marginal damage cost curve,the closer a standard or transferable emissions program will be to the socially efficient equilibrium than a tax.

Question

Quizplus · Accepted Answer

When there is uncertainty about the marginal abatement cost curve, a tax is generally closer to the socially efficient equilibrium than a standard or transferable emissions program, regardless of the shape of the marginal damage cost curve. This is because a tax directly targets the cost of emissions, making it more adaptable to changes in abatement costs.

When There Is Uncertainty About the Marginal Abatement Cost Curve,the