The Political economy of environmental policy with overlapping generations
AbstractA two-sector OLG model illuminates previously unexamined intergenerationaleffects of a tax that protects an environmental stock. A traded asset capitalizes the economic returns to future tax-induced environmental improvements, benefiting the current asset owners, the old generation. Absent a transfer, the tax harms the young generation by decreasing their real wage. Future generations benefit fromthe tax-induced improvement in environmental stock. The principalintergenerational conflict arising from public policy is between generationsalive at the time society imposes the policy, not between generations alive at different times. A Pareto-improving policy can be implemented under various political economy settings.
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Bibliographic InfoPaper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt67v8k1v5.
Date of creation: 07 May 2012
Date of revision:
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Life Sciences; Social and Behavioral Sciences; open-access resource; two-sector overlapping generations; resource tax; generational conflict; environmental policy; dynamic bargaining;
Other versions of this item:
- Karp, Larry & Rezai, Armon, 2012. "The Political economy of environmental policy with overlapping generations," CUDARE Working Paper Series 1128, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-22 (All new papers)
- NEP-DGE-2012-05-22 (Dynamic General Equilibrium)
- NEP-ENE-2012-05-22 (Energy Economics)
- NEP-ENV-2012-05-22 (Environmental Economics)
- NEP-POL-2012-05-22 (Positive Political Economics)
- NEP-RES-2012-05-22 (Resource Economics)
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- Armon Rezai, 2011. "The Opportunity Cost of Climate Policy: A Question of Reference," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(4), pages 885-903, December.
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