The paper aims to analyze the problem of regulating a pollution-generating single product monopolistic firm in the presence of information asymmetry about the firm?s cost performance. Following Boyer and Laffont (1999), incentive-based optimal regulation of the firm?s price/ output and the...

The paper re-examines the hypothesis: free movement of capital from capital-rich Northern" to capital-poor Southern" countries worsens the global environment. Assuming that national governments regulate the pollution level optimally, by trading-o? the marginal beneit of pollution against its...