One examines strategies of pollution control through choices between taxes and tradable permits, supposed to be decided at several time periods t1, t2, . . . , tI. At each of these time periods, the choice depends on the solution of a dynamic programming problem involving the expectations of the...

The literature on the impact of economic instruments (typically taxes and tradable permits) on the level of innovation is usually based on the assumption that innovation reduces the slope of the marginal abatement cost curve. This assumption, which usually leads to the conclusion that taxes...