A note on how demand uncertainty matters for emissions regulation in energy markets

Felipe Gomez-Trejos

Economics Letters, 2025, vol. 254, issue C

Abstract: I quantitatively assess the dynamic implications of uncertainty about future demand for relative welfare consequences of carbon taxes and cap-and-trade regulation within the context of the U.S. electricity sector. Over a wide range of policy-relevant abatement targets, carbon taxes outperform cap-and-trade in terms of welfare implications.

Keywords: Regulation; Welfare; Uncertainty; Emissions fee; Permit; Electricity; Energy (search for similar items in EconPapers)
JEL-codes: H21 H23 L51 Q48 Q58 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:254:y:2025:i:c:s016517652500271x

DOI: 10.1016/j.econlet.2025.112434

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