The article assesses the effects of different industrial sectors on the design of marketbased policies that mitigate climate change. It claims that the emission-intensive and fossil fuel industries, especially those exposed to trade, have a negative impact on the stringency of domestic market-based mitigation policies, namely, carbon taxes and Emission Trading Systems (ETS). To address endogeneity between industrial and policy outputs, the empirical analysis resorts to a nontraditional instrumental variable method constructing instruments with heteroskedastic errors in the data. With a dataset that covers 34 countries from 1990 to 2015, the analysis shows that there is a negative and statistically significant association between these industries and policy stringency, albeit in a differentiated way. Whereas the upstream fossil fuel industries have a negative relationship with carbon taxes, the power industry was only negatively associated with ETS. Emission-intensive manufacturers and the downstream fossil fuels industry have a negative effect on both policies. The design and practical applications of each policy explain the disparities; although ETS regulate larger emission-intensive installations such as power plants, carbon taxes tend to impose tariffs on activities that are not necessarily emission-intensive, such as oil extraction or specific fuels. The results, robust to different estimation methods, support that larger industrial outputs are significantly associated with less stringent mitigation policies.