We provide evidence of informed trading in the European carbon market. We adapt Easley et al.'s (1996) PIN methodology to the particularities of this market by isolating the trading activity on the two carbon offsets: European Union Allowances (EUAs) and Certified Emission Reductions (CERs). We...

It is tricky to design local regulations on global externalities, especially so if firms are mobile. We show that when costs and outside options are firms' private information, the threat of firm relocation leads to local regulations that are stricter, not looser. This result is general and...