Liberal Talk Radio

Is the Carbon Tax a better idea than a cap-and-trade system for reducing greenhouse gases? That’s the question. (See also Time.)

Carbon taxes are simpler to administer and harder to cheat on. On the other hand, cap and trade systems guarantee a reduction. With a tax, it’s possible that the system will just internalize the costs of the tax (demand for gasoline is inelastic, remember) and keep pumping.

I’ve advocated in the past in favor of cap-and-trade, but I’m beginning to see the merits of the tax. For a good he said/ she said, see Gristmill here (cap/trade) and here (tax).