Sandal, Lief K.; Steinshamn, Stein Ivar; Grafton, R. Quentin - Australian National University, Economics and … - 2001
Using a model of nonlinear decay of the stock pollutant, and starting from the same initial conditions, the paper shows that an optimal tax that corrects for both stock and flow externalities may result in a lower tax, fewer cumulative emissions (less decay) and higher output at the steady state...