As a novel feature, we distinguish between leakage at the extensive margin, where domestic firms relocate to foreign countries, and leakage at the intensive margin, where domestic firms lose world market shares
2/N
2/N
Comments
3/N
Intuition: equalize marginal abatement costs across sectors and ensures a domestic emissions target
4/N
Intuition: counteract leakage at the intensive margin by increasing international competitiveness
5/N
Intuition: counteract leakage at the extensive intensive margin by reducing the profit loss from regulation
6/N
Intuition: reduction in domestic consumption reduces net imports, thereby reducing the international price of green energy and thereby increasing foreign consumption, resulting in lower fossil fuel use
7/N
Intuition: increasing domestic production reduces net imports, thereby reducing the international price of green energy and thereby increasing foreign consumption, resulting in lower fossil fuel use
8/N