In this paper we characterize the preferences of a pessimistic social planner concerned with the potential costs of extreme, low-probability climate events. This pessimistic attitude is represented by a recursive optimization criterion à la Hansen and Sargent (1995) that introduces...

In this paper we characterize the preferences of a pessimistic social planner concerned with the potential costs of extreme, low-probability climate events. This pessimistic attitude is represented by a recursive optimization criterion à la Hansen and Sargent (1995) that introduces...

We model an environmental policy problem with two representative firms in two countries (one for each country). Firms are subject to environmental taxation, aimed at reducing CO2 emissions, and a unilateral technological spillover takes place: one of the two countries (innovating country) is...

We consider environmental regulation of n risk-averse, multiple pollutant firms. We develop a yardstick competition scheme where the regulatory scheme depends on the difference between a firm's aggregate performance and the average aggregate performance of the industry. Whether this instrument...