Abstract
Carbon pricing has become a cornerstone of environmental policies around the world. According to the latest World Bank tally, 110 carbon pricing instruments have been implemented, covering 53 countries, either through taxes or carbon markets. According to theory, carbon prices provide a clear price signal to the actors of the economy and informs them of the environmental cost of their pollution. They then have a clear incentive to reduce their emissions if they wish to reduce the associated bottom-line impact. The central question in this framework is to determine what the optimal carbon price should be.