Regulating Global Externalities

Regulating Stock Externalities Under Uncertainty

Using a simple analytical model incorporating benefits of a stock, costs of adjusting the stock, and uncertainty in costs, we uncover several important principles governing the choice of price-based policies (e.g., taxes) relative to quantity-based policies (e.g., tradable permits) for controlling stock externalities. Applied to the problem of greenhouse gases and climate change, we find that a...

1 Global Externalities Sovereign States

Trans-national externalities are increasingly important in the globalized economy, being related to knowledge, information, migrations, pollution, crime and similar flows. Their importance and close link to economic development may affect growth and welfare at a macroeconomic level: hence the need for global policies to correct their undesired effects. In the present institutional setting with ...

Global Externalities, Endogenous Growth and Sunspot fluctuations

We consider a two-sector economy with Cobb-Douglas technologies, laboraugmenting global external effects and increasing social returns. We prove the existence of a normalized balanced growth path and we give conditions for the occurrence of sunspot fluctuations that are compatible with both types of capital intensity configuration at the private level provided the elasticity of intertemporal su...

Regulating Externalities with Uncertainty, Investment, and Technology Spillovers

This paper analyzes optimal and non-optimal regulation of environmental externalities with investment in technology and uncertainty about the severity of environmental damages. Investment creates the potential for technology spillovers so that optimal regulation must address externalities from both emissions and investment. Despite these multiple externalities and uncertainty, we show that an o...

Inducing investments and regulating externalities by command versus taxes