This paper uses a micro-founded DSGE model to compare second-best optimal environmental policy, and the resulting Ramsey allocation, to first-best allocation. The focus is on the source and size of uncertainty, and how this affects optimal choices and the comparison between second- and...

We study tax competition when pollution matters. Most notably, we present a dynamic setting, where the supply of capital is endogenous. It is shown that tax competition may involve stricter environmental policy than the cooperative outcome. Copyright The Author(s) 2013

Thispaper examines the performance of non-cooperative environmentalpolicy in the case of local consumption externalities. In a two-countrymodel with monopolistic competiton, governments simultaneouslyimpose environmental product standards. Stricter regulationsforce the industrial sector to shift...