3/4. Price Discovery, Trade Policy, and Government Market Distortions — Terry Anderson (Editor) — Andersondiscusses Timothy Fitzgerald's analysis demonstrating that border carbon adjustment mechanisms frequently disguise protectionist trade policies, aligning with the "bootleggers and Baptists" theoretical model. Anderson stresses that authentic price discovery in financial markets is absolutely crucial for effective climate adaptation. However, government intervention, including subsidized insurance programs for flood and crop losses, systematically distorts accurate price signals, preventing consumers from developing effective behavioral and economic adaptations to genuine environmental risks.
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