Essays in environmental economics and policy

The dissertation consists of five chapters in Environmental Economics and Policy. The first three chapters consider (optimal) policy in situations where multiple market failures interact, or there exist restrictions on the type or scope of policy instruments available to the policymaker. The first chapter assesses under what conditions, and what type of, unilateral policy can prevent rising global emission concentrations. The second chapter analyzes second-best optimal environmental policy responses to real and financial shocks when firms are subject to credit constraints. The third chapter explores optimal transitory tax policy when the adjustment to a new consumption bundle is slow due to habit formation and the lack of habit internalization. The last two chapters focus on the size of the environmental externality, and the evaluation of policy effectiveness respectively. The fourth chapter develops a closed-form formula to compute the social cost of carbon (SCC), which explains the parameter-driven SCC variation of a mainstream IAM without systematic bias, and allows for an analytic breakdown and quantification of how different sets of parameters contribute to the SCC distribution. The fifth and final chapter is an empirical assessment of the effect of car registration and road taxes on vehicles average CO2 emissions from new vehicles in the EU15 countries over the period 2001-2010