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"This paper considers the question of under what circumstances a new environmental regulation should "phase in" gradually over time, rather than being immediately implemented at full force. The paper focuses particularly on climate policy, though its insights are more general. It shows that while adjustment costs provide a strong efficiency argument for phasing in a quantity-based regulation (or allowing intertemporal flexibility that creates the equivalent of a phase-in), this argument does not apply for price-based regulation. Indeed, in many cases, it will be more efficient to do just the opposite, setting an initially very high emissions price that then falls as the policy phases in. This difference in results comes not from any fundamental difference between price and quantity policies: under either policy, the efficient quantity of abatement rises over time, while the efficient price stays constant or even falls. But other considerations, such as distributional concerns or monitoring and enforcement issues, may still argue for a gradual phase-in even for a price-based policy"--National Bureau of Economic Research web site

Economic evaluations of pollution control policies have traditionally focused on pure efficiency effects either a comparison of their economic costs and environmental benefits, or a comparison of their costs relative to those of alternative control policies (e.g., Cropper and Oates 1992, Morgenstern 1997, Hahn 2005). However, the distribution of policy costs and benefits across households and firms is receiving increasing attention among researchers and policymakers.1 One reason is concern about whether a policy is ?fair? or not. Another is political feasibility a policy justifiable on efficiency grounds may be impractical if it imposes a disproportionate burden on a politically influential group. Often the two are critically related; for example, political opposition to higher fuel taxes, carbon taxes, or other emissions taxes in the United States is frequently based on the claim that such taxes fall most heavily on low-income groups. The purpose of this paper is to summarize what is actually known, and not known, about the incidence of benefits and costs from pollution taxes, and alternative emissions control measures, across household income groups.