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Carbon Pricing as an Effective
Instrument of Climate Policy:
Searching for an Optimal Policy Instrument

Alberto Ansuategi

- Ibon Galarraga*

University of the Basque
Country (UPV-EHU)

  Basque Centre for
Climate Change (BC3)

The paper highlights the use of carbon pricing as an effective market tool to control GHG emissions It describes the discussion on the benefits and limitations of both carbon tax and carbon trading. The paper summarises this debate and it argues that, as well as economic effectiveness, many other factors are highly relevant when choosing the right policy instrument. These include political feasibility, impact on competitiveness, institutional requirements, incentives for R&D and many others. Finally, interesting lessons are drawn for policy makers and academics willing to develop such instruments.
[JEL: Q54, Q58, H00] Keywords: carbon taxes; cap and trade.

Keywords: carbon taxes; cap and trade.



download the paper scarica il paper



*alberto.ansuategi@ehu.es - Foundations of Economic Analysis I. Faculty of Economics.http://www.ehu.es
*ibon.galarraga@bc3research.org - www.bc3research.org

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