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Abrego, Lisandro
Perroni, Carlo
Year of Publication: 
Series/Report no.: 
EPRU Working Paper Series No. 1999-19
University of Copenhagen, Economic Policy Research Unit (EPRU), Copenhagen
We describe a model of dynamic pollution abatement choices with heterogeneous agents, where, due to the presence of a distributional objective and to the absence of incentive-compatible compensation mechanisms, the choice of a second-best level of emission taxation is time-inconsistent. In this model, we investigate whether investment subsidies can act as a substitute for policy commitment.
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Working Paper

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