We study environmental policy for a polluting firmthat can invest in extracapacity. The optimal levels of allowed output as well as the tax rate are increasingin investment. With divisible investment, commitment always leads to the first best,under direct regulation and taxation. Time-consistent...

We consider the effects of an imperfectly competitive banking sector on the capital stock in a version of the two-period Diamond OLG model, focusing on how profits are returned. There are two broad alternatives: profits may be taxed and returned to households exogenously as fiscal transfers or...

This paper provides an analytical framework for exploring the relationshipbetween equity and efficiency for two riparians sharing a transboundary river.Decreasing marginal productivities of water make a noncooperative approach inefficientwhen water is scarce. If the upstream riparian uses its...

Several policy issues arise in this context. If households are unable or unwilling to move inold age, their consumption behaviour may be constrained by asset illiquidity...