fuel importers—effectively, a worsening of the terms of trade for the former. From a national welfare perspective, this would represent a co-cost rather than a co-benefit for exporters. But these costs are not considered here as they are tricky to estimate—they depend, for example, on how many countries price carbon and how fuel supply (often in administered markets) responds. Aggregating over fuel markets (where quantity changes reflect both own- and cross-price effects), the total welfare change is: ( 2 ) − Σ i ( z
the competitiveness of energy-intensive, trade-exposed firms . Leakage rates are not that substantial however, typically about 5–20 percent of the first-round emissions reduction from carbon pricing if a sizeable coalition of countries price carbon ( Fischer, Morgenstern, and Richardson 2015 , pp. 163), and the problem is confined to a limited number of industries (for example, chemicals, plastics, primary metals, petroleum refining). 40 Efficient resource allocation generally implies that industries unable to compete when energy is properly priced should