Over the past decades, polluting firms and government bodies have come to rely increasingly on specialized suppliers for the necessary goods, technologies and services that would alleviate their environmental footprint. These suppliers now form a large and growing industry, the so-called...

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...