After twenty years of global negotiations, the world is still far from a comprehensive climate agreement. The "top-down" approach embodied by the Kyoto Protocol has all but stalled, chiefly due to disagreements over levels of ambition and objections to financial transfers. To avoid those...

In this article, we provide an overview of a rather large topic: how economics can inform the selection and design of policy instruments to deal with environmental problems. We first identify (in Sections 1 – 2 ) underlying market failures that underscore the need for policy. Then, (in 3 ) we...