We consider a two period model of optimal regulation of a firm subject to marginal compliance cost shocks. The regulator faces an asymmetric information problem: the firm knows current compliance costs, but the regulator does not. Both the regulator and the firm are uncertain about future...

We study stabilization targets: common environmental policy recommendations that specify a maximum probability of an environmental variable exceeding a fixed target (e.g. limit climate change to at most 2°C above preindustrial). Previous work generally considers stabilization targets under...

Governments support particular firms or sectors by granting low interest financing, reduced regulation, tax relief, price supports, monopoly rights, and a variety of other subsidies. Previous work in partial equilibrium shows that subsidies to environmentally sensitive industries increases...

Countries that wish to erect trade barriers have a variety of instruments at their disposal. In addition to tariffs and quotas, countries can offer tax relief, low interest financing, reduced regulation, and other subsidies to domestic industries facing foreign competition. In a trade agreement,...

In this paper we derive conditions under which optimal tax rates for addictive goods exceed tax rates for non-addictive consumption goods in an environment where exogenous government spending cannot be nanced with lump sum taxes. Standard static models that consider revenue raising and...

Several recent papers propose competing theoretical explanations for the empirical observation of an inverted U-shape relationship between enviromental degradation and per-capita income. We proprose the following test of the theory: calibrate a theoretical model to an already developed economy...