We extend the tax versus permits literature by considering permit supply functions and pollution tax functions that are generalizations of the usual constant permit supply and constant pollution tax rate. In our model, pollution is not uniformly mixed and the regulator is uncertain about the...

Epidemiologists have documented both acute short-term and chronic long-term damages associated with exposure to air pollution, while atmospheric scientists have demonstrated that air pollution exposure depends on meteorological conditions, which are stochastic. We analyze the implications of...