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We study the incidence of carbon-reduction and green-energy promotion policies in an open fossil-fuel importing general equilibrium economy. The focus is on mixed price-based or quantity-based policies. Instruments directed toward promoting green energy are shown to reduce also carbon emissions and vice versa. Their direct effects are stronger than their side effects, the more so, the greater is the elasticity of substitution in consumption between en-ergy and the consumption good. We calculate the effects of variations in individual policy parameters, especially on energy prices and welfare costs, and determine the impact of exogenous fossil-fuel price shocks on the economy.

In the environmental economics literature the standard approach of modeling nonlinear production and abatement processes is to treat waste emissions "simply as another factor of production" (Cropper and Oates 1992). That approach doesn't map the materials flow involved completely and hides, moreover, the exact links between production, residuals generation and abatement. This paper shows that production functions with emissions treated as inputs can be reconstructed as a subsystem of a comprehensive production-cum-abatement technology that is in line with the materials-balance principle. In a simple economy with full regard of the materials flow it also explores the consequences for allocative efficiency and efficiency-restoring taxation of multiple and interdependent residuals generated in the transformation processes of production, abatement and consumption. Finally, the paper demonstrates that efficiency may require setting the emissions tax rate above or below conventionally defined marginal abatement cost if the residual subject to abatement is not the only residual causing pollution.

This volume brings together 8 previously unpublished papers dealing with various modes of allocating jointly consumable goods (i.e. public goods). The issues covered range from voluntary contributions and price exclusion (market allocation) to positive and normative analyses of different political allocation procedures for public goods. Given this wide spectrum of allocative schemes for public goods there does not seem to be an easy and clear-cut message from modern public-goods theory to public allocation policy.

A small open economy operates a carbon emission trading scheme and subsidizes green energy. Taking cap-and-trade as given, we seek to explain the subsidy as the outcome of a trilateral tug of war between the green energy industry, the black energy industry and consumers. With parametric functions we fully solve the competitive economic equilibrium and the lobbying Nash equilibrium. We show how the resultant subsidy depends on the political influence of all three lobbying groups and we trace its determinants. Whether consumers have green preferences turns out to be crucial for the results.

Environmental economics passed its age of infancy. It grew rapidly over the last decades and established itself as a discipline based on the powerful economic paradigm and reaching beyond it to capture important economy-environment interactions. The view offered here on the future of environmental economics is based on the premise that economic pressures will tend to put the ecological system under increasing stress and will thus geopardize the sustainable development of both the economic and the ecological system, unless the understanding of the economy-environment interdependence is further improved and all agents in the political decision making process can be convinced to take the necessary political action. The paper does not discuss the major likely, promising and/or necessary substantive topics on the agenda of future research in a systematic way. It chooses, instead, the methods of analysis as the primary organizing principle starting out from theoretical concepts (externality theory) and their ramifications then turning to issues of interdisciplinarity and empirical relevance to finally assess the (future) impact of environmental economics on shaping environmental policy. Real-world environmental problems, the driving forces of research in the field, are also addressed, of course, but under the premise that there is not too much dispute about what the relevant issues are. Attention is drawn on a number of current deficits and proposals for improvement are offered. Given the recent thriving expansion of the field and its increasing impact on practical environmental policy, there is little reason to believe that this positive development will not continue. But if additional efforts are directed towards coping with the current weaknesses identified in the paper environmental economists will certainly be able to do even better than in the past.

The basic focus of this paper is to look at ecological tax reform from a public good perspective rather than from a Pigouvian externality cum tax reform perspective. Our point of departure is the insight, aptly expressed by Heller and Starrett (1976, p. l 0), e. g., that "one can think of externalities as nearly synonymous with non existence of markets". In their view an externality is "a situation in which the private economy lacks sufficient incentives to create a potential market in some good and the non existence of this market results in losses in Pareto efficiency" (ibid.). Thinking of externalities or rather public goods in terms of (non existing) markets requires, first of all, to identify the commodities traded on these fictitious markets. In our context these goods are 'environmental quality' and 'nature's assimilative services' the former being a public good and the latter a private good. For reference purposes we build a simple model in which all disincentives of market creation are assumed to be absent: Nature's fixed endowment of assimilative services is privately owned and is sold to two different users, to the producer of environmental quality and to the consumption good industry. This fancy scenario of a complete set of competitive markets is known to constitute a first-best world with full internalization of the environmental externality. Government has no useful role to play since even the public good 'environmental quality' is privately provided in an efficient way - ignoring all the well-known problems of demand revelation and free riding.

This volume brings together 8 previously unpublished papers dealing with various modes of allocating jointly consumable goods (i.e. public goods). The issues covered range from voluntary contributions and price exclusion (market allocation) to positive and normative analyses of different political allocation procedures for public goods. Given this wide spectrum of allocative schemes for public goods there does not seem to be an easy and clear-cut message from modern public-goods theory to public allocation policy.

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