Question

A. How would abandoning market-based mechanisms affect the cost-effectiveness of achieving a given amount of greenhouse gas emissions abatement?

B. Who pays the cost of climate policy? Do perspective policies necessarily force companies to bear more of the costs of climate policy than market-based policies?

C. Would an efficient, market based approach to climate policy guarantee an equitable outcome in which Americans are better off?

Answer 1

Answer (A): Greenhouse gas emission has been one of the matters which has gained global importance in the last decade owing to the increasing negative effects of pollution around the world. Many economies have created certain market based approaches through which the government and the firms have put emphasis on the reduction of greenhouse gas emission, and have subsequently taken many steps in this regard. However, there have been many aspersions raised as to whether the market based approaches that have been inducted so far, is the right way to proceed. According to many renowned economists, abandoning the pre-existing market based approaches would initially result in to heavy cost incurring effect on the implementer. This is because the implementer would need to set up a new mechanism which would pull tremendous research and cost related to the development of the necessary infrastructure to carry out the new approach or mechanism. However, in the long run, the cost-effectiveness of the new approach would depend on the feasibility of the mechanism.

Answer (B): Although the cost of experimenting a new approach is on the forefront born by the implementer of the mechanism, however, in the true sense, it is the common people who bear the cost of any climate policy. Due to the high amount of pollution being emitted by the firms, any new mechanism experimentation results in to various levels of pollution increase, which directly affects the people. The implementer also bears the financial burden of the new mechanism in the initial phase.

                               Yes, perspective policies force the companies to bear more of the costs of climate policy than the pre-existing market based policies, as the implementer would need to set up a new mechanism which would pull tremendous research and cost related to the development of the necessary infrastructure to carry out the new approach or mechanism.

Answer (C): A new and efficient market based approach does not guarantee an equitable outcome for the American people, as the accurate efficiency and real effectiveness on the control of the greenhouse gas emission can only be ascertained in the long run. In the initial phase, a new approach might appear profitable or costly, however, only in the long run, the true nature of the new approach or mechanism can be justified.