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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...
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in the effect and size of productivity shocks explain most of the gap in misallocation between manufacturing and services …, while the remainder is explained by differences in firm productivity and age distribution. We interpret these results as …
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spillovers on firm-level productivity are extensively studied in applied work, but not in the context of resource misallocation …
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