Question

European countries have relied to a much greater extent on emissions charges than has the United States, which seems to be moving toward a greater reliance on cap-and=trade. From an Efficiency point of view, should the United Stated follow Europe’s lead and shift the emphasis toward emissions charges? Why or Why not?

Answer 1

The economy of US is so vast that emission charges might not make a huge difference in terms of the total economic scenario of the country and Cap and Trade is one such a policy where incentives are given in reducing the pollution which is quite an important aspect where a huge industry scene is present at the country, else charges might simply not be able to control the level of pollution on the whole. From an efficient point of view, US is indeed in a right track to rely on cap and trade for more efficient output from industries and that is the reason why US need not shift the emphasis or follow Europe on the whole.