CCfDs and compare it to other carbon pricing regimes. In our model, a regulator can offer CCfDs to risk-averse firms that … decide upon irreversible investments into an emission-free technology in the presence of risk. Risk can originate from the … instrument as it hedges firms’ risk encouraging investments when the firms’ risk aversion would otherwise inhibit this. In …

to economic activity and this makes CO2 prices grow at the same rate as the economy. Second, even if uncertainty about … CO2 prices must rise at a rate equal to the risk-adjusted interest rate, typically higher than the economic growth rate …. Summing up, CO2 prices must rise at a rate at least equal to the economic growth rate and at most to the risk …

although risk can be measured, uncertainty cannot be measured. Even though risk can be measured, a simple symmetric measure … attempt at "measuring" risk or (fundamental) uncertainty is flawed. … surge in the stock market would be self-correcting. Recent papers have discussed the role of "uncertainty" and its …