instruments: pollution taxes, pollution permits and Kyoto-like numerical rules for emissions. The setup is the basic stochastic … neoclassical growth model augmented with the assumptions that pollution occurs as a by-product of output produced and environmental …-best policy instruments. We find that, in all cases studied, pollution permits are the worst policy choice, even when their …

public finance. The setup is the basic stochastic neoclassical growth model augmented with the assumptions that pollution …, pollution permits are the worst recipe, even when their revenues are used to finance public abatement. When the main source of … uncertainty is economic, the best recipe is to levy taxes (on pollution or output) and use the collected tax revenues to finance …

instrument may not be beneficial when pollution from different firms is more likely to have local effects.Managerial implications …: Our results help to understand the pros and cons of each regulatory tool and provide guidance for regulation across …

with regulation and costly abatement. Regulation may be taxes or marketable permits. The innovating firm invests in R&D and … develops technologies which reduce the cost of pollution abatement. The innovating firm can patent this innovation and use a … either a pollution tax or a marketable permit. However, the returns to the innovator from innovation are not the same under …