Hatzipanayotou, Panos; Lahiri, Sajal; Michael, Michael S. - In: Canadian Journal of Economics 35 (2002) 4, pp. 805-818
We develop a two-country model of foreign aid and cross-border pollution resulting from production activities in the … recipient country. There is both private and public abatement of pollution, the latter being financed through emissions tax … recipient chooses the fraction of aid allocated to pollution abatement and the emission tax rate. At this equilibrium, an …