Carbon leakage is one of the major issues facing policymakers today when designing environmental regulation. While the empirical and trade literature on carbon leakage is rich, much less is known about the implications of carbon leakage risk on optimal regulatory policies under asymmetric...

The European Commission’s (EC) proposed Carbon Border Adjustment Mechanism (CBAM) is meant to mirror the carbon price of the EU Emissions Trading System (EU ETS) for several imported goods. While the CBAM can rely on certain aspects of the EU ETS regarding its costs and compliance obligations,...