In response to environmental concerns, multidivisional firms running internal markets often seek to have the associated internal (or transfer) prices incorporate their social cost of pollution. We develop a theoretical rationale and framework for this phenomenon. Modeling two vertically related...

The Stern-Stiglitz Report on carbon pricing emphasizes that climate policy must not only cope with market failures, but also with government and organizational failures. Focusing on the latter, this paper investigates how several human resource management devices - incentive compensation,...

In response to environmental concerns, multidivisional firms running internal markets often seek to have the associated internal (or transfer) prices incorporate their social cost of pollution. We first investigate this phenomenon. Modeling two vertically related subsidiaries located in...