This paper develops a theoretical model to study how investment decisions in innovation taken by a single agent are influenced by environmental externalities produced by investment decisions taken by other agents. The model acts in a dynamic framework, where knowledge stock represents the...

Voluntary environmental agreements are widely considered an alternative instrument to command-and-control policies or economic incentives and are frequently labeled “efficient” or “cost-effective.” In this article it is argued that voluntary agreements are much more limited in scope. It...