The impact of shocks in dynamic environments depends on how forward-looking agents anticipate the path of future fundamentals that shape their decisions. We incorporate flexible beliefs about future fundamentals in a general class of dynamic spatial models, allowing beliefs to be evolving,...

Abstract This study examines the welfare implications of allowing border carbon adjustments (BCAs) in a globalized economy characterized by international trade and cross-border pollution (CBP). The model predicts that adopting BCAs is a weakly dominant strategy and global welfare is maximized...

Purpose: Unlike the common belief in the so-called “trickle-down effect,” trade-induced output growth in a small open economy does not necessarily improve the domestic welfare of the economy. The purpose of this paper is to analyze the conditions under which the trickle-down effect does not...

This paper analyzes the welfare implications of abatement technology licensing under taxation and emission trading schemes. We demonstrate that a firm with a better abatement technology optimally sells a per-unit royalty license to a competitor under both schemes but offers a higher royalty rate...

Purpose – Unlike the common belief in the so-called ‘trickle-down effect,' trade-induced output growth in a small open economy does not necessarily improve the domestic welfare of the economy. This paper analyzes the conditions under which the trickle-down effect does not work properly such...

This study examines the welfare implications of border carbon adjustments (BCAs) in a globalized economy characterized by international trade and cross-border pollution (CBP). The model predicts that adopting BCAs is a weakly dominant strategy and global welfare is maximized when at least one...

The inelastic supply of fossil energy in the international input market precipitates failure of Pigouvian taxation consequent to competition among governments, as imposition of an environmental tax increases (decreases) the marginal cost of domestic (foreign) firms. This paper demonstrates that...

We extend the conventional perspective of economic research, that individuals' preferences are exogenously given or shaped by exogenous shocks, to assess whether and to what extent an artificial policy intervention that requires adult individuals to engage in social activities can nurture...