MURTY, SUSHAMA; RUSSELL, R. ROBERT - In: Journal of Public Economic Theory 7 (2005) 1, pp. 117-150
We characterize Pareto-improving and equilibrium-preserving policy reforms in a second-best (Diamond/Mirrlees) world with a consumption externality. A counterintuitive finding is that, starting from an initial equilibrium with no direct quantity control on the externality, it is possible that...