We consider a model of polluting firms subject to tax on emissions, monitoring, and penalties in case of underreporting and which face a choice between a more expensive clean and a less expensive dirty technology. Moreover, emissions are subject to random events.We show that the optimal...

This paper studies the effect of foreign direct investment (FDI) on environmental policy stringency in a two-country model with trade costs, where FDI could be unilateral and bilateral and both governments address local pollution through environmental taxes. We show that FDI does not give rise...

This survey reviews the recent literature on the double-dividend hypothesis of environmental taxes and discusses some recent extensions of the standard model such as the distributional consequences and the importance of the non-separability assumption between consumption goods and environmental...

This survey reviews the recent literature on the double-dividend hypothesis of environmental taxes and discusses some recent extensions of the standard model such as the distributional consequences and the importance of the non-separability assumption between consumption goods and environmental...