We develop an overlapping generations growth model in which the individuals care about the environment. Many environmental policies suffer from institutional failures. We focus on the failure resulting from the delegation by the government of the exercise of the environmental policy to an administrative department. Though motivated by the department's expertise, the delegation principle may give rise to a conflict with social welfare maximization. This paper proposes an original policy mechanism of transfers of pollution rights capable of circumventing these failures and decentralizing optimal growth atcompetitive equilibrium.
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number
2005042.
Find related papers by JEL classification: D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General D64 - Microeconomics - - Welfare Economics - - - Altruism
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