We consider a symmetric three-stage game played by a pair of regulator-firm hierarchies to capture the scale and technology effects. Each firm produces one good sold on the market. The production process generates pollution characterized by a fixed emission/output ratio, and cross-borders. Firms...

We show that a technological breakthrough that reduces CO2 emissions per output can exacerbate the climate change problem: countries may respond by raising their emissions resulting in an increase of the stock of pollution that may reduce welfare. Using parameter values based on empirical...

We develop a product-differentiated model where the product space is a network defined as a set of varieties (nodes) linked by their degrees of substitutability (edges). We also locate consumers into this network, so that the location of each consumer (node) corresponds to her “ideal”...

The standard two-country model of international trade with monopolistic competition predicts a more-than-proportional relationship between a country's share of world production of a good and its share of world demand for that same good, a result known as the home market effect. We first show...

The purpose of this paper is twofold. First, we present a new model of agglomeration and trade that displays the main features of the recent economic geography literature while allowing for the derivation of analytical results by means of simple algebra. Second, we show how this framework can be...

This paper is based on empirical research on a taxonomy of technological environmental innovations. It draws on a databank with over 500 examples of new technologies (materials, products, processes and practices) which come with benign environmental effects. The approaches applied to...

In 2004, ten new states entered the European Union. Relative to the pre-2004 member states, these accession states have lower environmental standards, and some worry that it will be too demanding for these new EU members to fully comply with European environmental provisions. In this paper, we...

Technological innovation is a key factor for achieving a better environmental performance of firms and the economy as a whole, to the extent that it helps to increase the material/energy efficiency of production processes and to reduce emission/effluents associated to outputs. Environmental...

This paper analyses optimal investments in innovation when dealing with a stringent climate target and with the uncertain effectiveness of R&D. The innovation needed to achieve the deep cut in emissions is modelled by a backstop carbon-free technology whose cost depends on R&D investments. To...

This paper shows in an empirical context that substantial cost reductions can be achieved in the implementation of Dutch national climate policy by (i) targeting the policy at the stock of greenhouse gases, thus allowing polluters flexibility in their timing of emission reductions; and (ii)...