Publication

This report explores the feasibility of a carbon tax as a price control mechanism to help limit carbon dioxide emissions in the US. It provides an overview of the choices involved between a cost (tax) and a quantity (cap) control instrument for greenhouse gas emissions. The authors discuss policy tools to bridge the gap between a carbon tax and a cap-and-trade program and analyze the potential advantages and disadvantages of a carbon tax. They also explore implementation issues, including where to apply the carbon tax, at what level to set the tax, and options for distributing tax revenues.