Economic theory and empirical models suggest that economic instruments should help us to meet environmental goals at lower cost. Practical experience, however, shows that the cost savings of emission trading are smaller than expected and charges usually have had small incentive impacts. This book gives a comprehensive review of economic theory, simulation models, and practical experience with the use of economic instruments. The book focuses on air pollution control. Part I examines theoretical aspects and simulation modelling in a national context. Part II surveys the practical experience in a variety of countries. Part III explores international issues, such as joint implementation. Because of its blend of theoretical and empirical research, the book should prove interesting for both economists and those interested in environmental policy.