Two main approaches have been implemented in regional CO2 markets to address competitiveness and carbon leakage: output based allocation (Australia, California, New Zealand) and capacity based allocation (EU). This paper characterizes the best policy, given that auctioning with border adjustment...

For carbon-intensive, internationally-traded industrial goods, a unilateral increase in the domestic CO2 price may result in the reduction of the domestic production but an increase of imports. In such sectors as electricity, cement or steel, the trade flows result more from short-term regional...

For carbon-intensive, internationally-traded industrial goods, a unilateral increase in the domestic CO2 price may result in the reduction of the domestic production but an increase of imports. In such sectors as electricity, cement or steel, the trade flows result more from short-term regional...

The transition of a sector from a pollutant state to a clean one is studied. A green technology, subject to learning-by-doing, progressively replaces an old one. The notion of abatement cost in this dynamic context is fully characterized. The theoretical, dynamic optimization, perspective is...

We assume that a project requires an initial outlay and may either succeed or fail. The probability of success depends on its type and on the effort of the firm. Only in the case of success do private and external benefits appear. The paper analyzes the optimal design of subsidies under...

The paper examines the relevant cost benefit framework for public authorities investigating the potential of local projects to mitigate climate change. Because these projects are typically limited in time and space, continuation pathways need be introduced to capture the benefits provided by a...

Two main approaches have been implemented in regional CO2 markets to address competitiveness and carbon leakage: output based allocation (Australia, California, New Zealand) and capacity based allocation (EU). This paper characterizes the best policy, given that auctioning with border adjustment...

In industries with large sunk costs, the investment strategy of firms depends on the regulatory context. We consider ex-ante industrial policies in which the sunk cost may be either taxed or subsidized, and antitrust policies which could either be pro-competitive (leading to divestiture in case...

Demand uncertainty is thought to in uence irreversible capacity decisions. Suppose local demand can be sourced from domestic (rigid) production or from (fl exible) imports. This paper shows that the optimal domestic capacity is either increasing or decreasing with demand uncertainty depending on...

Competitiveness and carbon leakage are major concerns for the design of CO2 emissions permits markets. In absence of a global carbon tax and of border carbon adjustments, output based allocation is a third best solution and is actually implemented (Australia, California, New Zealand). The EU has...