The stylized model presented in this paper extends the approach developed by Fischer and Newell (2008) by analysing the optimal policy design in a context with more than one externality while taking explicitly into account uncertainty surrounding future emission damage costs. In the presence of...

This paper investigates how uncertainty affects the optimal intertemporal accumulation of a stock externality using CO2 emissions and the greenhouse effect as a topical pars pro toto. More precisely, the evolution of the future temperature is assumed to follow an Ito-process with the drift...