Research

Working Papers

How to Set Carbon Prices | JMP (alternative link)

Abstract: Existing carbon pricing policies address the climate externality insufficiently and have a regressive incidence. This paper provides a novel theoretical foundation for differential carbon pricing across commodities that addresses both issues: carbon prices should be higher on more elastic goods and can be lower on goods whose incidence falls heavily on burdened households. These results are derived under the premise that carbon prices are designed in isolation from other tax and transfer policies; co-optimization recovers uniform carbon pricing. Estimates of sufficient statistics for isolated carbon price reforms in the US suggest that higher taxes on gasoline, residential electricity, and natural gas require a social cost of carbon above $560.

Emissions Trading with Supply Adjustment Mechanisms and Market Power | with Simon Quemin and Niklas Schoch

Abstract: Supply adjustment mechanisms (SAMs) are a central feature of modern emissions markets, yet their interaction with market power remains unexplored. We develop a dynamic permit market model to study how the choice between a price-based and a quantity-based SAM indicator shapes firms' incentives to exercise market power. We find this choice has contrasting first-order effects: a well-designed price-based SAM can discipline strategic withholding and reduce price markups, whereas a quantity-based SAM systematically exacerbates market power and becomes inoperative in late market stages. Our results suggest that SAMs are not merely tools for enhancing market resilience, but can be explicitly designed to mitigate market power in emissions markets.

Work in Progress

Politically Fragile Emission Caps | with Justus Heuer and Saskia Schütte

Sufficient Statistics for Double Dividend Environmental Tax Reforms | single-authored

Evaluating Tax Systems when the Labor Force Changes | with Robin Liebholz