Prices vs. Quantities with Increasing Marginal Benefits
Event Details
Presenter
Jay Coggins, University of Minnesota
Abstract
The function describing the benefits to abatement is dual to an underlying dose-response function that relates health outcomes to pollution levels. Recent articles by a few health scientists have found strictly concave dose-response functions for fine particulates. In these articles, the first unit of dose is the most damaging, the last unit of abatement (taking us to zero concentration) the most valuable. The dual benefit function must be strictly convex and so marginal benefits to abatement must be upward sloping. We compare quantity and price instruments in this setting, discovering that identifying the optimal price policy can be surprisingly difficult from a technical perspective. A quantity policy is never strictly preferred to a price policy. The level of uncertainty plays a central role that appears to have escaped notice until now, and the optimal emissions tax is sometimes discontinuous in the level of uncertainty.
Date
Wednesday, July 18, 2012
12:00 - 1:30 p.m. Lunch will be provided. Location
1st Floor Conference Room
1616 P St. NW
Washington, D.C. 20036 All seminars will be in the 7th Floor Conference Room at RFF, unless otherwise noted, 1616 P Street NW. Attendance is open, but involves pre-registration no later than two days prior to the event. For questions and to register to an event, please contact Khadija Hill at [email protected] (tel. 202-328-5174). Updates to our academic seminars schedule will be posted at www.rff.org/academicseminarseries.
