This innovative book models pollution mitigation as a negative externality whilst also providing desirable and useful solutions, such as establishing the triangular equivalence relationship among the Lindahl equilibrium without transfers, the Nash bargaining solution with the payoffs of the Cournot-Nash equilibrium as the status quo point, and the social optimum under the Lindahl weights. By introducing programming algorithms to validate these relationships numerically, Zili Yang bridges the gap between analytical results and empirical modelling, ultimately solving the Lindahl equilibrium and hybrid Nash equilibria in the influential RICE model. This text demonstrates the complexity and variety of environment externality problems, ranging from mixed externality to correlated externalities to environmental externality under IRS and policy applications. Integrating theory, algorithms and applications in a comprehensive framework, The Environment and Externality will benefit scholars and students working across environmental, resource and climate change economics.

'This exceptional book covers most facets of environmental economics in an original manner, providing the theory, modelling tools and algorithms behind them. It carefully describes the applications of the theoretical framework to concrete situations and environmental problems. This rigorous, practical, innovative monograph provides a well-designed, unifying framework of environmental externalities to enhance our understanding of environmental issues.' Carlo Carraro, Università Ca' Foscari
'The Environment and Externality by Zili Yang will become an essential text for instructors teaching graduate-level courses in environmental economics. Yang does a masterful job of determining the optimal level of externality in both static and dynamic models under cooperative, non-cooperative, and coalitional solutions. Lindahl taxes and emission and concentration caps are analyzed as potential policies to achieve optimal externality.' Jon M. Conrad, Cornell University
'Many times, after hearing my explanation of a model with environmental externalities, a good student would ask - what are the important assumptions and how do they matter? Professor Zili Yang's new book empowers its readers with answers to these questions and much more! It offers a clear analytical discussion of the importance of environmental externalities, both static and dynamic; explains the strengths and weakness of institutions designed to address them; and provides the computational tools to see why the assumptions matter. It should be an essential companion to advanced courses in environmental economics.' V. Kerry Smith, Arizona State University
'The important topics Yang discusses ought to be known and understood by all scholars seeking to undertake advanced research in environmental economics … Recommended.' A. A. Batabyal, Choice Connect

Zili Yang is Professor of Economics at the State University of New York at Binghamton. He has collaborated with Professor William Nordhaus, winner of the 2018 Nobel Prize for Economics, on the development of the RICE model. He is the author of Strategic Bargaining and Cooperation in Greenhouse Gas Mitigations (The MIT Press, 2008).