“…Early attempts in this direction include simulations of carbon taxation with static singlecountry models (Bussolo and Pinelli (2001), Edwards (1996Edwards ( , 1998, Harrison and Kriström (1998), Pench (1998Pench ( , 2001, Stampini (2001)), while dynamic and multi-country models have appeared more recently (Jensen (1998), Springer (1998), Rutherford, Böhringer andPahlke (1998), Pench (1999), Böhringer (1998Böhringer ( , 1999, Böhringer, Jespen and Rutherford (2000)). 4 In this context, it is often necessary to depart from the standard assumptions of fixed endowments, closed economy and perfectly competitive markets.…”