摘要：This paper employs analytical and numerical general equilibrium models to examinethe costs of achieving pollution reductions under a range of environmental policy instrumentsin a second-best setting with pre-existing factor taxes. We compare the costs and overallefficiency impacts of emissions taxes, emissions quotas, fuels taxes, performance standards,and mandated technologies, and explore how costs change with the magnitude of pre-existingtaxes and the extent of pollution abatement.We find that the presence of distortionary taxes raises the costs of pollution abatementunder each instrument relative to its costs in a first-best world. This extra cost is an increasingfunction of the magnitude of pre-existing tax rates. For plausible values of pre-existing taxrates and other parameters, the cost increase for all policies is substantial (35 percent or more).The impact of pre-existing taxes is particularly large for non-auctioned emissions quotas: herethe cost increase can be several hundred percent. Earlier work on instrument choice hasemphasized the potential reduction in compliance cost achievable by converting fixedemissions quotas into tradable emissions permits. Our results indicate that the regulator'sdecision whether to auction or grandfather emissions rights can have equally important costimpacts. Similarly, the choice as to how to recycle revenues from environmentally motivatedtaxes (whether to return the revenues in lump-sum fashion or via cuts in marginal tax rates)can be as important to cost as the decision whether the tax takes the form of an emissions taxor fuel tax, particularly when modest emissions reductions are involved.In both first- and second-best settings, the cost differences across instruments dependimportantly on the extent of pollution abatement under consideration. Total abatement costsdiffer markedly at low levels of abatement. Strikingly, for all instruments except the fuel taxthese costs converge to the same value as abatement levels approach 100 percent
