We compare the effects of taxes and quotas for an environmental problem in which the regulator and polluter have asymmetric information about abatement costs, and the environmental damage depends on the stock of pollution. We thus extend to a dynamic framework previous studies in which...

The amount of cooperation needed to improve the welfare of signatories of International Environmental Agreements (IEAs), in the presence of market imperfections, depends on the characteristics of pollution. In a dynamic model, the conventional wisdom on the effect of free-riding needs to be...

Several economic growth models show that the equilibrium outcome may depend on agents' beliefs (expectations) rather than on economic fundamentals (history). In this situation, the equilibrium is indeterminate. However, if agents have "almost common knowledge" rather than common knowledge about...

The Clean Development Mechanism (CDM) has been proposed as a means of reducing the costs of abating greenhouse gasses, and for assisting developing countries. Although the CDM offers apparent environmental benefits, in addition to benefiting both investors and developing country hosts, it has...

We compare the effects of environmental reform and harmonization in the short and the long run, under autarky and free trade. With trade, harmonization of policies, even if achieved by lowering standards in one country, can improve short run aggregate welfare and increase the likelihood of...

We study the situation where firms' actions contribute to a stock externality. The regulator and firms have asymmetric information about serially correlated (abatement) costs. With price-based policies such as taxes, the regulator learns about the evolution of both stock and costs. This ability...

We compare the advantages of targeting either the growing sector or the shrinking sector in an economy where migration occurs too slowly, and the government has only second-best policy instruments. If the government is able to make commitments, we show (in a special case) that it should target...