Project Management

Setting The Initial Time-Profile Of Climate Policy: The Economics Of Environmental Policy Phase-Ins

Download Now Date Added: Jun 2010
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This paper considers the question of under what circumstances a new environmental regulation should "Phase in" gradually over time, rather than being immediately implemented at full force. The paper focuses particularly on climate policy, though its insights are more general. It shows that while adjustment costs provide a strong efficiency argument for phasing in a quantity-based regulation (or allowing intertemporal flexibility that creates the equivalent of a phase-in), this argument does not apply for price-based regulation.