We determine the core characteristics of a climate coalition's optimal policies in a dynamic two country directed technical change framework. Unilateral policies alter the structure of production and thereby innovation incentives across countries. Whenever feasible, optimal policies implement...

The relationship between economic growth and pollution is very complex, depending upon a host of different factors. Thus the study of this phenomenon represents a challenging endeavor. While most economics papers begin with theory and support that theory with econometric evidence, the literature...

Environmental policy affects the distribution of market shares if intermediate goods are differentiated in pollution intensity. When innovations are environmental friendly, a tax on emissions skews demand towards new goods, which are the most productive. In this case along a balanced growth path...