Production often causes pollution as a by-product. Once pollution problems become too severe, regulation is introduced … and decline of pollution can be explained by policyinduced technology shifts. …

there is no perfectly clean technology that eventually solves the pollution problem once and for all. New technologies have … stings attached, i.e. each emits a specific stock pollutant. Damages are convex in individual pollution stocks but additive … across stocks, creating gains from diversification. The research and pollution policies are tightly linked in such a setting …

the new technology may turn out to generate a new pollution problem. R&D may therefore be optimally undertaken more than … once. Using and externding recent results from multi-stage optimal control theory, we provide a full characterization of … the optimal pollution and R&D policies. The optimal R&D program is strictly sequential and has an endogenous stopping …

growth theory: variety expansion (HIP) and quality improvements (VIP). We compare the policies that match the decentralised …