This paper surveys the various forms of market failure that can arise when innovating entrepreneurs consider entering an industry, and outlines possible implications for public policy. Externalities can arise from entrepreneurial activities such as spillover benefits from new innovations and...

In this paper, we characterize a mechanism for reducing pollution emis sions in which countries, acting non-cooperatively, commit to match each others' abatement levels and may subsequently engage in emissions quota trading. The an alysis shows that the mechanism leads to efficient outcomes. The...

This paper studies the optimal Pigouvian tax for correcting pollution when the government also uses distortionary taxes to raise revenues. When preferences are quasilinear in leisure and additive, the Pigovian tax can be separated from the Ramsey revenue-raising tax. We characterize the...