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...

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 market levies pollution taxes on the polluting...

Complex systems exposed to pollution may suddenly and permanently shift to a dangerous regime. This paper studies a dynamic game among countries that face the prospect of such a shift. Each country derives some flow utility from its own emissions, which are chosen unilaterally. But flow...

This paper examines the formation of International Environmental Agreements (IEAs). The economic literature focuses on scenarios where countries are weakly sensitive to environmental damages (constant or linear marginal damages) and finds that stable coalitions are small when countries choose...

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 threat of a sudden irreversible jump in the global damages at an unknown date....