We provide a unified discussion of the issues that confront negotiators of the next international climate agreement. We offer a novel proposal that entitles countries to discharge their treaty obligations by paying a “fine”. This escape clause provides cost insurance, simplifies the problem...

If a monopoly supplies a perishable good, such as tickets to a performance, and is unable to price discriminate within a period, the monopoly may benefit from the potential entry of resellers. If the monopoly attempts to intertemporally price discriminate, the equilibrium in the game among...

This paper contributes to the growing effort to synthesize the fields of trade policy and environmental policy. We discuss: the question of whether international trade undercuts unilateral internalization policies: the role of income constraints in environmental policy; and the possibility of...

A dynamic hedging problem with stochastic production is solved. The optimal feedback rules recognize that future hedges will be chosen optimally based on the most current information. The resulting distribution of revenue is analyzed numerically. This analysis enables the hedger to select his...

The problem of choosing second-best trade policies is modified by including sector-specific policies as well as tariffs. We obtain conditions under which reduction of the largest tariff is welfare improving. Formulae for the optimal tariff and sector-specific subsidy are used to study the design...

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...