This paper is a first attempt to empirically measure transaction costs – a composite of administrativecosts and trading costs – of firms in the European Union's CO2 Emissions Trading Scheme (EU ETS)during its trial phase (2005-2007). This analysis provides some evidence that transaction...

We argue that the literature on the green paradox has largely ignored the demand side of the resource market, and that this side of the market may mitigate the size of an emissions increase in response to imperfect climate policies. These claims are informed by recent empirical findings. Our...

We study the effectiveness of environmental policy in a model with nonrenewable resources and an unavoidable implementation lag. We find that a time lag between the announcement and the implementation of an emissions quota induces an increase in emissions in the period between the policy's...

This paper presents the first empirical test of the green paradox hypothesis, according to which well-intended but imperfectly implemented environmental policies may lead to detrimental outcomes due to supply side responses. We use the introduction of the Acid Rain Program in the U.S. as a case...

Using a stylized theoretical model, we argue that current economic analyses of climate policy tend to over-estimate the degree of carbon leakage, as they abstract from the effects of induced technological change. We analyse carbon leakage in a two-country model with directed technical change,...