From the WSJ's Weekly Review:
by Editorial Staff
Mar 13, 2009
TOPICS: Environmental Regulation
SUMMARY: The global warmists don't like the truth.
CLASSROOM APPLICATION: The related editorial sparked a lively debate between Resources for the Future economists and the editors of The Wall Street Journal. The disagreement is about who pays for cap and trade carbon regulations. In particular, do residents of states in which carbon tends to be produced pay more for the regulatory cap than residents of other states? Resources for the Future economists Dallas Burtraw and Richard Sweeney claim that the Wall Street Journal, by citing state-level CO2 production data, rather than CO2 consumption data, exaggerated regional differences in cap and trade incidence.
1. (Introductory) Discuss the effect of a tighter CO2 cap on employment levels and prices of consumer goods?
2. (Advanced) How do economists measure the effect on economic welfare of a tighter cap?
3. (Advanced) Who pays for cap and trade? In particular, is this payment regressive?
Reviewed By: James Dearden, Lehigh University