Across the globe climate policy is shifting away from a carbon price towards investment subsidies, such as grants, interest-subsidised loans or guarantees. This increases the risk of inefficient public spending. This paper shows how the main market imperfections related to the emission...

For a durable consumption good which turns into waste after consumption, the socially optimal durability increases with an increase in the marginal environmental damage. In a laissez-faire equilibrium under perfect competition, producers fail to provide an efficient product design, i.e....

This paper develops a theoretical model to study how investment decisions in innovation taken by a single agent are influences by environmental externalities produced by investment decisions taken by other agents. The model acts in a dynamic framework, where knowledge stock represents the...

This paper analyzes the optimal level of public debt when taxes are used not only for funding public expenditures but also for correcting externalities from climate change. Taking into account externalities implies that the optimal policy deviates from tax smoothing. Provided cumulative marginal...