This article deals with cooperation issues in international pollution problems in a two-dimensional dynamic framework implied by the accumulation of the pollutant and of the capital goods. Assuming that countries do reevaluate at each period the advantages to cooperate or not given the current...

This paper analyzes how the way emission permits are traded-their market microstructure-affects the optimal policy to be adopted by the environmental agency. The microstructure used is one of a quote driven market type, which characterizes many financial markets. Market makers act as...