In this paper, we study the effects of environmental regulation which establishes binding targets to pollution accumulation. Pollution follows a geometric Brownian motion. Inside the targets, pollution behaves as if it were freely floating until it hits one of the two limits. The model provides...

This paper presents and analyses the main pollution control instruments available to governments in a mixed capitalist economy. It is argued that the appropriateness of different instruments should not be judged a priori on ideological grounds. Instead, instruments should be selected on the...