Private firms reluctant to invest in pollution abatement when the penalty for noncompliance falls short of the cost of abatement may be more willing to invest in pollution abatement when enforcement is tougher or when information is released that allows capital markets to react to ranking of...

This paper models the simultaneous investments in cost-reducing and environmental R&D by asymmetric firms competing à la Cournot. Pollution rights are allocated by the regulator, and firms can trade pollution permits. Both R&D competition and R&D cooperation are considered; in the latter case,...

An interesting feature of pollution permit markets is that citizens may purchase permits to directly lower the levels of pollution. We analyze the effects of citizens' demand for permits on incentive compatible mechanisms for pollution control that are based on permit markets. We show that...