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Emissions taxes, tradeable emission permits and voluntary compliance policies are becoming the instruments of choice in controlling environmental problems at the national and international level. Careful design of these policies in second-best environments is a very important factor for their...
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This quote contains two separate policy suggestions: (1) Trade barriers insulate production and welfare from any adverse responses to costly environmental restrictions. (2) Banning multinationals would insulate production and welfare from any adverse effects of costly environmental restrictions....
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