The efficiency effects of carbon pricing depend on how it impacts distortions in fossil fuel markets, most notably from local air pollution externalities. By offsetting these distortions, carbon pricing may generate significant net economic benefits, so it is in countries own interests to...

Economic competition among governments, making use of both fiscal and regulatory policy instruments, is the subject of great concern on both sides of the Atlantic, for fear that it gives rise to a "race to the bottom" resulting in levels of public services that are too low. This paper explores...