Abstract Climate change currently represents the greatest market failure. Economic policy measures to address it have long been known. However, their implementation often fails due to the narrow interests of those for whom the necessary measures entail economic disadvantages. A government committed to maximising longterm welfare would override such resistance. However, if government ministers are seeking reelection, they are susceptible to lobbying activities aimed at preventing ambitious climateprotective economic policies. In order to implement stricter climate protection policies nonetheless, individual disadvantages must be mitigated through government measures such as the redistribution of climate levies, transfers, regulation, and labour market and industrial policy.
Thieß Petersen (Fri,) studied this question.