ABSTRACT

In the present chapter we conduct three conceptual experiments involving a change in an environmental policy variable. In the first case, we consider the effects upon the global economy of an increase in the volume of pollution or harvesting rights issued by the international agent. In the second, we consider the effects of a reduction in the initial stock of the home country’s nonrenewable resource. In the third, we consider the effects of a reduction in the foreign country’s initial stock of its non-renewable resource. We close this analysis with a brief consideration of the critical role of markets for pollution and harvesting rights in revealing the anticipated benefits from current efforts to devote real resources during the current period to develop technologies that either reduce emissions associated with the extraction and use of the nonrenewable resource or reduce the amount of pollution in the biosphere.