Emission policy in an economic union with Poisson technological change

This study examines optimal emission policy in a union of countries. In each country, labor is used in either production or research and development (R&D) which increases the probability of the improvement of production technology. The production of goods in any country incurs emissions that are spread all over the union. A household’s utility in any country depends positively on his personal consumption and negatively on total emissions in the union. This study constructs the Pareto-optimal emission taxes for the countries. Journal of Economic Literature: 041, H23, F15