This paper considers a trade situation where the production activities of potentially heterogeneous countries generate pollution which can cross borders and harm the well-being of all the countries involved. In each of those countries the policy maker levies pollution taxes on the polluting...

We characterize the equilibrium level of emissions, the equilibrium stock of global pollution and the discounted net social welfare for both the cooperative and non-cooperative equilibria when the countries face the risk of a sudden irreversible jump in the global damages at an unknown date. The...

This paper extends the standard model of self-enforcing dynamic international environmental agreements by allowing the length of the period of commitment of such agreements to vary as a parameter. It analyzes the pattern of behavior of the size of stable coalitions, the stock of pollution, and...

There is mounting evidence that increasing natural resource exploitation (e.g., fossil fuel extraction and consumption) could trigger irreversible dramatic ecological events like global warming. While capacity investment costs and the possibility to produce at full capacity are two factors that...