When faced with making economic trade-offs between lower upfront purchase costs and lower operating costs, many consumers experience “capital bias”, a phenomenon that is tantamount to discounting future costs excessively. Consumers may therefore end up with investments that are sub-optimal...

The paper compares the effects of market-based and command-and-control climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on the model proposed in Acemoglu et al. (2012, American Economic Review), we show that market-based policies...

I examine a policy-making game among countries that must choose both a policy instrument (e.g., a tax or a quota) and its intensity (i.e., the tax rate or the quota level) to price pollution. When countries price pollution non-cooperatively, they not only set the intensity inefficiently, they...

The present paper analyzes the impact of a climate coalition's border carbon adjustment on emissions from commodity production, welfare and the coalition size. The coalition implements border carbon adjustment to reduce carbon leakage and to improve its terms of trade, while the fringe abstains...

Carbon tariffs are one prominently discussed environmental policy. The proponents stress the carbon tariffs' ability to mitigate the potential negative effect of environmental-friendly production on competitiveness, to avoid carbon leakage and to reduce world carbon emissions. We analyze the...