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Well, there's an easy way to solve it: whack a carbon tax or emissions permit liability on imported goods from non-Kyoto compliant regimes.  That way the externality is removed, and the market will operate at its proper price.

(Unfortunately, the NZ government just gutlessly bowed to pressure from the business and farming sectors and canned its proposed carbon tax.  They still claim they will meet our Kyoto obligations - but with two years to go and no policy, it's difficult to see how).

by IdiotSavant on Fri Dec 23rd, 2005 at 06:06:17 PM EST
[ Parent ]
Just tax land use, extractive industries, energy, fossil fuels, agriculture and fisheries, and reduce income and capital taxes accordingly.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Fri Dec 23rd, 2005 at 06:59:49 PM EST
[ Parent ]
Yes, tax rent i.e. things that are more expensive just because they are physically rarer (and the demand for which will not be less because of the tax). Stirling Newberry has written some interesting diaries about this.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (jeromeguillet@yahoo.fr) on Sat Dec 24th, 2005 at 03:51:54 AM EST
[ Parent ]

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