摘要：An auction of carbon permits is the best way to achieve carbon caps set byinternational negotiation to limit global climate change. To minimize administrative costs,permits would be required at the level of oil refineries, natural gas pipe lines, liquid sellers,and coal processing plants. To maximize liquidity in secondary markets, permits would befully tradable and bankable. The government would conduct quarterly auctions. A standardascending-clock auction in which price is gradually raised until there is no excess demandwould provide reliable price discovery. An auction is preferred to grandfathering (givingpolluters permits in proportion to past pollution), because it allows reduced tax distortions,provides more flexibility in distribution of costs, provides greater incentives for innovation,and reduces the need for politically contentious arguments over the allocation of rents.
