Abstract:This note focuses on two types of distortions that can prevent the market from functioning optimally. The first results from CO 2 emissions generated by the consumption of fossil fuels. The second is related to R&D activities, since innovators are generally incapable of securing the totality of the benefits created by their innovations. Two types of instruments can be used in order to correct for these externalities: a carbon price on the one hand, and research subsidies on the other hand. These instruments te… Show more
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