Different regulatory bodies tend to develop environmental policies not recognizing the interdependencies between externalities. For example, one authority may regulate a stock pollution and another a flow pollution that result from the same activity. This study introduces a two-phase...

We consider firms combining variable inputs and heterogeneous capital goods. Input use may cause simultaneous flow and stock externalities (e.g., air pollution/ climate change). Regulatory bodies typically develop separate policies for each externality but do not recognize that many...