We study the endogenous formation of climate coalitions linked to a preferential free trade arrangement. In a multi-stage strategic trade and participation game, coalition and fringe countries dispose of a discriminatory tariff on dirty imports as well as emission permits imposed on domestic...

This study analyses the economic and political consequences of introducing a tax on the carbon content of imported goods at EU borders and whether such a tax would be compatible with WTO rules. The major findings are: 1. A CO2 border tax or import tariff would increase global welfare; 2. Such a...

Industrialised countries are often required to make unpopular policy choices in order to efficiently tackle climate change. On the one hand, domestic industries might consider national climate measures as an excessive burden that may damage their competitiveness. On the other hand, the public...