We analyze non-cooperative environmental policy when the only strategic interaction between countries is through bilateral transboundary pollution, i.e., countries are closed or small open economies. When countries set pollution taxes simultaneously, there is no carbon leakage. However, in the sequential-move game, the leader sets its pollution tax lower than the marginal damage from own pollut...

If a coalition of countries implements climate policies, nonparticipants tend to consume more, pollute more, and invest too little in renewable energy sources. In response, the coalition’s equilibrium policy distorts trade and it is not time consistent. By adding a market for the right to exploit fossil fuel deposits, I show that these problems vanish and the …rst best is implemented. When the ...

The United States Government recently developed a range of values representing the monetized global damages associated with an incremental increase in carbon dioxide (CO2) emissions, commonly referred to as the social cost of carbon (SCC). These values are currently used in benefit-cost analyses to assess potential federal regulations. For 2010, the central value of the SCC is $21 per ton of CO...

We study the potential conflict between cost minimization and investment in prevention for a risky venture. A natural monopoly is regulated i) for economic purposes; ii) because it can cause losses of substantial size to third parties (the environment or people). The regulator observes the production cost without being able to distinguish the initial type (an adverse selection parameter) from t...

In this paper we examine an alternative policy scenario, where governments allow polluting …rms to trade permits in a strategic environmental policy model. We demonstrate, among other things, that with no market power in the permits market, governments of the exporting …rms do not have an incentive to under-regulate pollution in order to become more competitive. This strategic e¤ect is reversed...

In this paper, we analyse how the prospect of international negotiations over transboundary pollution shapes intra-country transfer schemes when the governments of the countries’polluting regions are in charge of environmental policy and negotiations. Federal governments can implement compensation payments between domestic regions and matching grants prior to the international negotiations betw...

We examine the number of patent applications for climate change mitigation technologies (CCMT) filed at the European Patent Office and seek to relate it to the oversupply of emission allowances under the European Union Emission Trading System (EU ETS). We use a panel count data approach to show that firms covered by the policy take the oversupply into account when determining their level of inn...

The Effect of Inspector Group Size and Familiarity on Enforcement and Deterrence The paper provides new insights into the productivity of teams and the relationship between the inspector and the inspected party. Exploiting exogenous variation in the number of inspectors that are sent to offshore oil and gas platforms in the Gulf of Mexico, we find that adding an inspector does not simply result...

We compare the performance of liability rules for managing environmental disasters when third parties are harmed and cannot always be compensated. A firm can invest in safety to reduce the likelihood of accidents. The firm’s investment is unobservable to authorities. Externality and asymmetric information call for public intervention to define rules aimed at increasing prevention. We determine ...

According to the pollution haven effect (PHE) mobile capital responds to environmental regulation by moving from countries with high regulation to those with low regulation. Previous tests of the PHE have focused on host country regulation effect. This study also examines the effect of home country regulation on foreign direct investment (FDI). I use a panel of 28 OECD countries for 1981-2000 t...