In this paper, we extend the well known result that hyperbolically discounting agents tend to postpone costs into the future. In a simple model we show that, without commitment to the ex ante optimal plan, no investment in environmental protection is undertaken over the whole time horizon, no...

To correct market failures due to the presence of negative externalities associated with energy consumption, governments have adopted a variety of policies, including taxes, subsidies, regulations and standards, and information-based policies. For example, labels that clearly convey energy...

Under imperfect competition, the effect of a cap-and-trade system on indus- try profits depends on the type of abatement technology that is used by firms: industries that use process-integrated technologies are more affected than those using end-of-pipe abatement technologies. The interaction...

The paper aims at extending the debate on Environmental Kuznets Curves to the case of non-renewable resources and to discuss the driving forces that might give rise to EKC's in this case. The paper at hand deviates from the standard EKC analysis in two ways: First, mostly EKC's are analyzed for...

In this paper we analyze the importance of recycling in the strive for sustainable development. In contrast to former approaches we emphasize the role of the waste stock as a source of valuable inputs. We enhance a Romer (1990) type endogenous growth model by a material balance condition that...

This paper investigates the convergence hypothesis for per capita CO2 emissions with a panel of 166 world areas covering the period 1960-2002. The analysis is based on the evolution of the spatial distributions over time. Robust measures of dispersion, asymmetry, peakedness and two nonparametric...

If firms are unable to fully control their emissions, the cap in a permit market may be exceeded. Using stochastic aggregate emissions as the underlying I derive an options pricing formula that expresses the permit price as a function of the penalty for noncompliance and the probability of a...

Although market power in permit markets has been examined in some detail following the seminal work of Hahn (1984), the effect of free allocation on price manipulation with market power in both output and permit market has not specifically been addressed. I show that in this case, the threshold...

In the first phase of the EU Emissions Trading Scheme (EU ETS), the price per ton of CO2 rose to over €30 before decreasing to zero by mid 2007. I examine to what extent this variation can be explained by marginal abatement costs by deriving a structural model of the allowance price under the...

The pollution-convergence hypothesis is formalized in a neoclassical growth model with optimal emissions reduction: pollution growth rates are positively correlated with output growth (scale effect) but negatively correlated with emission levels (defensive effect). This dynamic law is...