I examine a policy-making game among countries that must choose both a policy instrument (e.g., a tax or a quota) and its intensity (i.e., the tax rate or the quota level) to price pollution. When countries price pollution non-cooperatively, they not only set the intensity inefficiently, they...

Steffen Kallbekken and Torben K. Mideksa explain why economic analysis may demand sharp emissions reductions today rather than the gradual path recommended by Sheila Olmstead and Robert Stavins.