Fossil fuels are non-renewable carbon resources, and the extraction path of these resources depends both on present and future demand. When this 'Hotelling feature' is taken into consideration, the whole price path of carbon fuel will shift downwards as a response to the reduced cost of the...

A sufficiently rapidly rising carbon tax may increase near-term emissions compared with the case of no carbon tax. Even so, such a carbon tax path may reduce total costs related to climate change, since the tax may reduce total carbon extraction. A government cannot commit to a specific carbon...

This paper addresses the timing and interdependence between innovation and environmental policy in a model of research and development (R&D). On a first-best path the environmental tax is set at the Pigouvian level, independent of innovation policy. With infinite patent lifetime, the R&D subsidy...

Economies that currently have the same productive capacity may implement different growth rates. This entails that it is insufficient to base international comparisons of welfare solely on current well-being, or introducing the potential for future growth in an arbitrary manner. NNP-based...

Even for fully equity-financed firms there may be substantial effects of taxation on the after-tax cost of capital. Among the few studies of these effects, even fewer identify all effects correctly. When marginal investment is taxed together with inframarginal, marginal beta differs from average...

Discounting in the presence of catastrophic risk is a hotly debated issue, in particular with respect to climate change. Many scientists and laymen concerned with potentially catastrophic impacts feel that if an increase in the discount rate drastically increases the likelihood of catastrophic...

I consider a society with heterogeneous individuals who can form organizations for the production of a differentiated service. An arrangement of organizations is said to be split up stable when there is no majority to split any of the organizations. Unlike other equilibrium concepts in the...

This paper analyses the default option typical to American mortgages. Households borrow to buy durable housing, but future house prices are uncertain, and households find it dvantageous to default on their debt if house prices fall sufficiently. A key assumption of the model is that households...