In our analytical general equilibrium model where two polluting inputs can be substitutes or complements in production, we study the effects of a tax on one pollutant in two cases: one where both pollutants face taxes and the second where the other pollutant is subject to a permit policy. In...

In addition to regulatory strategies, the federal government has spent large amounts of money to pay for or to subsidize pollution control and other environmental measures. Although those expenditures have often achieved environmental improvements, they have not always done so as cost...