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Discussion Paper

Optimal Unilateral Carbon Policy David A. Weisbach, Samuel S. Kortum

Published: November 2021
Researchers examine optimal carbon policy in a model where one region of the world imposes carbon policy and the rest remain passive.

In their model, researchers discern a carbon policy that would optimize the tradeoffs that occur when carbon policy in one area of the world causes changes in extraction, production, and consumption in another area of the world. They propose three clear implementations of the optimal carbon policy and address the issue of leakage, the phenomenon in which corporations tend to move pollution-heavy operations to countries with fewer climate restrictions.

Abstract and Citation