International Review of Environmental and Resource Economics > Vol 2 > Issue 3

A Review of Carbon Market Policies and Research

Donald F. Larson, Economic Research Group,World Bank, USA, Philippe Ambrosi, Environment Department, World Bank, USA, Ariel Dinar, Economic Research Group,World Bank, USA, Shaikh Mahfuzur Rahman, Department of Agricultural and Applied Economics, Texas Tech University, USA, Rebecca Entler, Department of Energy and Mineral Engineering, The Pennsylvania State University, USA
Suggested Citation
Donald F. Larson, Philippe Ambrosi, Ariel Dinar, Shaikh Mahfuzur Rahman and Rebecca Entler (2008), "A Review of Carbon Market Policies and Research", International Review of Environmental and Resource Economics: Vol. 2: No. 3, pp 177-236.

Publication Date: 30 Nov 2008
© 2008 Donald F. Larson et al.
Environmental Economics
Carbon finance marketsFlexibility mechanismKyoto protocolLiterature review


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In this article:
1 Introduction 
2 Science and Policy 
3 Features of the Climate Change Framework 
4 Expected Outcomes from the Climate Change Framework 
5 Domestic Policies in the European Union, the United States, and Australia 
6 Carbon Markets63 
7 Conclusions and Areas for Future Study 


We describe important institutions that shape climate change policies together with a set of key market-reliant instruments. We selectively review the related economic literature, emphasizing empirical studies that assess the efficacy of current policies and the workings of policy-dependent markets. Special attention is given to new carbon finance markets tied to the Kyoto Protocol's flexibility mechanisms. Promising areas for future research are identified.