We study the impact of emissions tax and emissions cap-and-trade regulation on a firm's technology choice and capacity decisions. We show that emissions price uncertainty under cap-and-trade results in greater expected profit than a constant emissions price under an emissions tax, which...

Emissions regulation today is non-uniform, with some regions imposing carbon costs within their borders while many others do not. This gives rise to concerns over carbon leakage ― offshoring and foreign entry in response to regional asymmetry in carbon costs. It is widely believed that carbon...

Carbon regulation is intended to reduce global emissions, but there is growing concern that such regulation may simply shift production to unregulated regions, potentially increasing overall carbon emissions in the process. Carbon tariffs have emerged as a possible mechanism to address this...