Some research indicates that the CO2 emissions play an important role in the sustainable development and environmental protection. It is important to analyse these trends to develop cohesive solutions and reduce the futurity risks in the process (Arrow, 2011). The relationships are found to exist between CO2 emissions and the economic growth. From analysis of developed nations and emerging countries, it was found in this research that the countries that higher levels of CO2 emissions and economic growth values. In this section, there is a combination of developed and emerging countries. The factoring of the high-income nations and developing nations was considered. The high-income countries are connected with each other based on the of CO2 emissions. The same analysis is used to apply to many other environmental sources from different nations.
By controlling the CO2 emissions, the possibilities of market failure would exist. The market failure is the process where the allocation of the goods and services is not effective or efficient. One of the significant market failures that would arise in this paradigm is the issues between the principle and agent. A principle-agent problem arises from this process. In this case, the stakeholders in the relationship between the principle and the agent would have different agendas and issues. In this paradigm, there will be arising of the information asymmetry in this process. The pure self-interest of the people leads to the development of the results that are not effective. These need to be improved from the social point of view. The plausible market externalities are positive and negative externalities. The positive externality is that the goods or the services would provide benefit for the third party. Negative consequent that would arise from this issue is the increase in the CO2 emissions. The issues of monopoly of some companies would be a reality in the cases of CO2 emissions. The inequality of the markets can cause the markets to be impacted. The information failure occurs when there is a lack of making informed choices. These are some of the market failures and issues that could arise in this process. Feasible solutions must be drawn so that that each company and stakeholder would need to develop to address the fallacies in the market.