In this paper, we extend the well known result that hyperbolically discounting agents tend to postpone costs into the future. In a simple model we show that, without commitment to the ex ante optimal plan, no investment in environmental protection is undertaken over the whole time horizon, no...

Environmental policy often has to be devised under informational constraints, like uncertainty and asymmetric information. We consider an environmental policy that aims at reducing the welfare losses caused by asymmetric information while being sufficiently simple for implementation. In this...

This paper explores to what extent secondary policy issues are infuenced by electoral incentives. We develop a two dimensional political agency model in which a politician decides on both a frontline policy issue and a secondary policy issue. The model predicts when the incumbent should...

We study how international environmental agreements can take advantage of domestic time-inconsistency problems. Policymakers often prefer future policies to be sustainable, but are tempted to invest less when being in office. We find the equilibrium number of signatory countries to be higher...

Sustainability pledges are en vogue. In the business sector, but also in climate negotiations, pledges are used to signal actors' intention to act pro-environmentally. Laboratory experiments testify to the potential effectiveness of these public declarations. Previous work has examined under...

By affecting prices and thereby market shares of green and brown firms, product innovations and process innovations influence industry emissions even when they do not directly affect the emission intensity of the innovating firm. Using a differentiated two-stage duopoly, this paper therefore...