This paper takes on the issue of ‘Prices vs. Quantities’, see Weitzman (1974), applied to environmental regulations under uncertainty. It is shown that, from an efficiency point of view, it is generally preferable to divide the economy into two parts, one regulated through a tax and the...

This paper takes its departure in two observations from the EU’s climate policy. First, the EU has adopted a dual approach with a trading scheme covering CO2 emissions from the energy intensive industry, while the remaining emitters are subject to emission taxes. Second, the targets are...

We explore the efficacy of price and quantity controls in a dynamic set up in which the decisions of some agents are irreversible. We demonstrate that the assumption of irreversibility improves the performance of a tax relative that of a system of tradable quotas and significantly alters the...

We consider an intertemporal policy game between changing governments that differ in their attitudes towards a particular feature of market outcomes, exemplified with environmental pollution. When in power, a government will choose policy instruments and set strictness of regulation with a view...

We analyse environmental policy under asymmetric information in a context where a homepolluting firm, selling its final output solely in a foreign market with some market power, has an option to bypass domestic regulation through setting up new plants in a jurisdiction offering lenient...

In this paper we address the control problem of a social optimum in presence of waste and capital stocks. We address this problem in two stages. In the first, we suppose that output is fixed; next, we endogenize output allowing for growth. The analytical framework is simple. Consumption is assumed...

In this paper we develop a model of pollution control which maximizes the present value of net social benefits. We show that the presence of an upper constraint on emissions affects the pollution control even when emissions are far below the level where the constraint binds. We get three main...

This paper uses a real options approach to examine the impact of abrupt increases in carbon dioxide emissions and pollutant-related socio-economic costs. It derives optimal investment rules in the form of critical values for both pollutant stock levels and social costs, above which environmental...

This work contributes to the debate on coordination of international environmental policy by revisiting Mandell (2008)’s result who, on the ground of Weitzman (1974)’s model, is in favor of a decentralized regulation at the sectorial or country level instead of a unified one. We show that...

This paper compares, in a polluting oligopoly, an emission tax and a form of environmental policy called voluntary agreement (va). The output contraction resulting from the tax amplifies the distortion due to imperfect competition making the tax sub-optimal. The va studied here is a...