The paper deals with the analysis of nationally optimal tax structures as to internalize crossborder externalities. Furthermore, the existence of a double dividend arising from the implementation of pollution taxes is evaluated. In the presence of lump-sum taxes both pollution taxes and capital...

Asymmetric regulation of a global pollutant between countries can alter the competitiveness of industries and lead to emissions leakage, which hampers countries' welfare. In order to limit leakage, governments consider supporting domestic trade exposed firms by subsidizing their investments in...