climate policy in the presence of leakage. We ignore the welfare gain from reducing greenhouse gas emissions and focus on the … welfare cost of the emissions tax or permit scheme. Whereas that prior paper solves for changes in emissions quantities and … unilateral carbon tax results in a welfare loss. With positive leakage, however, a unilateral policy can improve welfare. …

, price supports, monopoly rights, and a variety of other subsidies. Previous work in partial equilibrium shows that subsidies … subsidies in general equilibrium. Since all resources are used, whether or not subsidies increase emissions depends on the … incentives to emit of the industry which would otherwise use the resources. Since subsidies must move resources to a less …