Options for Policy-Makers: Addressing Competitiveness, Leakage and Climate Change
This paper presents the options policy-makers have when addressing competitiveness and leakage relating to the mitigation of climate change. The issues faced have much in common worldwide: the sectors that have the highest competitiveness concerns tend to be the same for all countries and compete within the same world market. All policy-makers share the same concerns for protecting domestic employment, and though the scales differ, all have been impacted by the financial crisis. This paper takes a structured and objective approach, seeking to identify the scale of the problem, the options that could be employed to address it and the wide range of impacts the policies could have. (Impacts are not only economic: environmental and political impacts are among other key concerns.) It uses empirical information where possible, backing it up with the necessary economic theory needed to analyze the options.