This note derives the dynamic programming equation (DPE) to a differentiable Markov Perfect equilibrium in a problem with non-constant discounting and general functional forms. We begin with a discrete stage model and take the limit as the length of the stage goes to 0 to obtain the DPE...

A regulator anticipates learning about the relation between environmental stocks and economic damages. For a model with linear-quadratic costs and a general learning process, we show analytically that anticipated learning decreases the optimal level of abatement "at a given information set." If...

We compare taxes and quotas when firms and the regulator have asymmetric information about abatement costs. Damages are caused by a stock pollutant. Uncertainty enters multiplicatively, i.e. it affects the slope rather than the intercept of abatement costs. We calibrate the model using cost and...

The ongoing debate concerning the ranking of taxes versus cap and trade for climate policy begins with \ps{Weitzman74} seminal slope-based criterion and concludes that taxes dominate quotas. We challenge this conclusion and the intuition behind it. Because technology shocks and pollution stocks...

Reflecting the emphasis of recent work in the field of trade and the environment, this review focuses on empirical issues, primarily econometric estimates of the pollution haven effect and simulation-based calculations of carbon leakage. A brief discussion of the theory explains why intuition...

The Clean Development Mechanism (CDM) has been proposed as a means of reducing the costs of abating greenhouse gasses, and for assisting developing countries. Although the CDM offers apparent environmental benefits, in addition to benefiting both investors and developing country hosts, it has...