In reality, environmental regulations are rarely comprehensive enough to apply a given
emissions price to all economic sectors or agents. For example, the European Union’s Emissions
Trading Scheme (ETS) currently covers sectors responsible for only about half of the
EU’s CO2 emissions. Far more frequently the goal is to maximize cost-effectiveness within a
targeted sector or set of industries. Imposing a common emissions price on all agents within
the targeted sector or group of industries will minimize costs (narrowly defined) within that
group, but generally will not lower costs as much as a more comprehensive program can