I examine a policy-making game among countries that must choose both a policy instrument (e.g., a tax or a quota) and its intensity (i.e., the tax rate or the quota level) to price pollution. When countries price pollution non-cooperatively, they not only set the intensity inefficiently, they...

While poorer countries have a much smaller public sector and correspondingly a smaller tax burden than richer countries, their economic performance has not been necessarily better. This paper discusses the role that institutional quality plays in determining government’s effectiveness in...