Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
We construct a dynamic general equilibrium model of pollution and study in a holistic way the environmental policies, whereby government sets up emission caps and sells emission permits at a competitive price which can be viewed as an emission tax. Then, it uses the collected tax revenues to finance public abatement activities. We characterize a steady-state equilibrium and show how it changes with the size of the economy and with a change in natural pollution absorption rate.