ECON 489/689 Thinking Points for Third Midterm Broad Policy Thought Questions (1) Discuss the performance of cap-and-trade systems, emissions taxes, and command-and-control approaches along the following dimensions: a. Reducing emissions by x % b. Achieving an x % reduction at lowest abatement cost c. Minimizing transaction costs d. Ensuring “clean air” in different locations e. Avoiding reshuffling “dirty” production elsewhere f. Being flexible to uncertainty about future costs of abatement (2) How does the efficiency of a cap-and-trade program compare to alternative approaches to reducing greenhouse gas emissions? E.g. a low carbon fuel standards. (3) When are prices suitable energy policy tools, when are they not, and what are suitable alternatives? True/False/Uncertain . For each question, answer “True” or “False” or “Uncertain” and explain your answer. Use graphs if necessary. On the midterms, if you do not provide an explanation, you will not receive any credit. (1)
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