A growing literature suggests that carbon emissions are most efficiently reduced by carbon pricing. There are, however, three challenges that limit our understanding of market-based mechanisms: studies often (a) predict, rather than evaluate effects, (b) show large difference in findings, and...

Carbon taxes are a prominent policy instrument for decreasing the consumption of CO2-intensive goods in order to reduce the negative external effects involved in the production or consumption of such goods. A tax leads to higher consumer prices, which typically lowers consumption. However, in...

A growing literature suggests that carbon emissions are most efficiently reduced by carbon pricing. The evidence base on the effectiveness of market-based mechanisms, however, faces three key limitations: studies often (a) predict, rather than evaluate effects, (b) show large difference in...