This paper shows that firms respond strategically to ENERGY STAR, a voluntary certification program for energy-efficient products. Firms offer products that bunch at the certification requirement, differentiate certified products in energy and non-energy dimensions, and charge a price premium on...

This paper analyzes the long-term investment decisions of firms that are regulated by an emissions tax and that perceive a degree of market power in their respective output markets. Firms invest in abatement equipment that is fixed over the medium term (e.g., buying a new generator). This paper...

We explore the possibility of achieving a cooperative outcome when governments act non-cooperatively in a strategic environmental policy model where emission permit markets are linked. We introduce a specific distribution scheme of the permit revenues between the exporting countries so as to...

In this paper we extend a model by A. Ulph (1997) on the relationship between free trade agreements, environmental regulation and trade under imperfect competition. Ulph's model focused on the effectiveness of harmonisation policies against ecological dumping. It turned out that harmonised...

Several empirical studies document the relevance of firm heterogeneity to assess the effect of trade and environmental policy. This paper develops a multi-country and -sector general equilibrium trade model with heterogeneous firms and analyzes the effect of domestic carbon pricing as well as...

The European Union (EU) is implementing a Carbon Border Adjustment Mechanism (CBAM) at its borders, which will require exporters of basic materials to surrender emission permits when exporting to the EU market. Since it makes foreign producers compete under a carbon price, the EU CBAM may...