We derive optimal input taxes to control stock pollution problems generated by heterogeneous agents. The taxes vary over time and in response to differences of asset quality and technology choice. We also derive second-best policies and compare them to the efficient policy and also among...

This paper presents a framework to determine optimal resource allocation over time for the production of a good by heterogeneous producers who generate a stock externality. We analyze the optimal intertemporal and quality-specific combination of abatement strategies at the source given by a...