We investigate the performance of a consumption-based carbon tax – implemented by full border carbon adjustment – as an instrument of unilateral climate damage mitigation in a two-period two-country general equilibrium model with a finite stock of fossil fuel. The implementation of that tax...

The conventional wisdom suggests that a stricter enforcement policy can reduce pollution emissions. Nevertheless, this present paper argues that this assertion does not necessarily hold if the stringency of environmental regulation is subject to the influence of lobbying. A stricter enforcement...