Na and Shin (1998) showed that the veil of uncertainty can be conducive to the success of self-enforcing international environmental agreements. Later papers confirmed this negative conclusion about the role of learning. In the light of intensified research efforts worldwide to reduce...

We study the situation where firms' actions contribute to a stock externality. The regulator and firms have asymmetric information about serially correlated (abatement) costs. With price-based policies such as taxes, the regulator learns about the evolution of both stock and costs. This ability...