Using a model of nonlinear decay of the stock pollutant, and starting from the same initial conditions, the paper shows that an optimal tax that corrects for both stock and flow externalities may result in a lower tax, fewer cumulative emissions (less decay) and higher output at the steady state...

The paper examines howan easy-to-apply optimal feedback rule can be used to solve for optimal levels of exploitation of a renewable resource. Using data from Canada's northern cod fishery, the optimal feedback rule is used to derive optimal levels of exploitation for the years 1962–91 under...