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]]> By: Martin Brock http://cafehayek.com/2009/05/costs-are-not-benefits.html/comment-page-1#comment-46751 Martin Brock Mon, 04 May 2009 08:39:42 +0000 http://localhost/wordpress/?p=2340#comment-46751 <blockquote> ... option 3 seems pretty attractive. </blockquote> <p>The obvious next step for Cap and Trade regimes is a tariff on imports from states that don't play.</p> <p>Since Krugman concedes the higher cost, why wouldn't competitors, not required to own the credits to emit, buy the credits anyway? They buy the credits not to emit carbon but to invest in a cost imposed on their competitors. Maybe Chinese monetary authorities, selling discounted yuan for dollars to pursue a mercantilist trade policy, decide that these credits are a better investment than Treasury securities. Both are entitlement to rents imposed on U.S. production.</p>

… option 3 seems pretty attractive.

The obvious next step for Cap and Trade regimes is a tariff on imports from states that don't play.

Since Krugman concedes the higher cost, why wouldn't competitors, not required to own the credits to emit, buy the credits anyway? They buy the credits not to emit carbon but to invest in a cost imposed on their competitors. Maybe Chinese monetary authorities, selling discounted yuan for dollars to pursue a mercantilist trade policy, decide that these credits are a better investment than Treasury securities. Both are entitlement to rents imposed on U.S. production.

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