Pricing greenhouse gas emissions is a way to put a price tag on the costs of their negative externalities in order to reduce and remove market distortions. Tools range from voluntary compensation, via taxation and special levies and fees to different trading schemes, and their implementation varies geographically. A border-adjustment tax would help adjust prices across the variety of schemes to avoid carbon leakage and resulting market distortions. What impact do different CO2 pricing mechanisms and adjustment taxes have on global trade?
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