The use of a constant discount rate to study long-lived environmental problems such as global warming has two disadvantages: the prescribed policy is sensitive to the discount rate, and with moderate discount rates, large future damages have almost no effect on current decisions. Time-consistent...

Abstract: We reconsider the problem of inefficiency and nonexistence of a competitive equilibrium in exhaustible resource markets where extraction costs are nonconvex. The existence of a backstop technology (which induces a flat portion of the industry demand curve) restores both existence and...

We use a cake-eating model with a non-renewable resource and a backstop technology to describe the effect of migration of poor workers into a rich country with surplus labor. Migrants receive a large transfer from natives. If future migration is anticipated, natives' flow of utility increases...

Governments' desire to ameliorate environmental problems may conflict with other goals. Policy levels which balance different objectives can be altered by policy changes in other countries. A decrease in the importance of the pollution problem, or an increase in its global extent, increase the...

The amount of cooperation needed to improve the welfare of signatories of International Environmental Agreements (lEAs), in the presence of market imperfections, depends on the characteristics of pollution. In a dynamic model, the conventional wisdom on the effect of free-riding needs to be...

The Clean Development Mechanism (CDM) has been proposed as a means of reducing the costs of abating greenhouse gasses, and for assisting developing countries. Although the CDM offers apparent environmental benefits, in addition to benefiting both investors and developing country hosts, it has...

The effect of risk aversion on Nash equilibrium trade restrictions is studied using numerical methods. An increase in a nation's level of risk aversion can lead to either an increase or decrease in its equilibrium restriction and either an increase or decrease in its rival's restriction. The...

We study a land developer's decision to invest in a wetlands mitigation bank. The state at which it is optimal to "cash in" the investment in return for restoration credits increases with uncertainty. We calibrate and numerically solve a stochastic control model which describes the developer's...