This paper studies optimal second-best corrective regulation, when some agents/activities cannot be perfectly regulated. We show that policy elasticities and Pigouvian wedges are sufficient statistics to characterize the marginal welfare impact of regulatory policies in a large class of...

We analyze the impact of a rise in protectionism on environmental regulation. Using the 2018 US-China trade war as a quasi-natural experiment, we find that higher exposure to tariffs leads to less stringent regulation targets in China, increasing air pollution and carbon emissions. Politically...