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Environmental maintenance in a dynamic model with heterogenous agents

Author

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  • BORISSOV, Kirill

    (Saint-Petersburg Institute for Economics and Mathematics (RAS) and European University at St. Petersburg, Russia)

  • BRECHET, Thierry

    (Université catholique de Louvain, CORE and Louvain School of Management, B-1348 Louvain-la-Neuve, Belgium)

  • LAMBRECHT, Stéphane

    (Université de Valenciennes et du Hainaut-Cambrésis and Laboratoire EQUIPPE, Université de Lille 1, France; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

Abstract

We assume a population of infinitely-lived households of the economy split into two groups : one with a high discount factor (the patient) and one with a low one (the impatient). The environmental quality is deteriorated by firm's polluting emissions. The governmental policy consists in proposing households to vote for a tax aimed at environmental maintenance. We study the voting equilibrium at steady states. The resulting equilibrium maintenance is the one of the median voter. We show that (i) an increase in total factor productivity may produce effects described by the Environmental Kuznets Curve, (ii) an increase in the patience of impatient households may foster environmental quality if the median voter is impatient and maintenance positive, (iii) a decrease in inequality among the patient households leads to an increase in environmental quality if the median voter is patient and maintenance is positive. We also show that, if the median income is lower than the mean, our model predict lower level of environmental quality than the representative agent model, and that increasing public debt decreases the level of environmental quality.

Suggested Citation

  • BORISSOV, Kirill & BRECHET, Thierry & LAMBRECHT, Stéphane, 2012. "Environmental maintenance in a dynamic model with heterogenous agents," LIDAM Discussion Papers CORE 2012008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2012008
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    Cited by:

    1. Borissov, Kirill & Pakhnin, Mikhail & Puppe, Clemens, 2017. "On discounting and voting in a simple growth model," European Economic Review, Elsevier, vol. 94(C), pages 185-204.
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    3. Kirill Borissov & Mikhail Pakhnin, 2018. "Economic growth and property rights on natural resources," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(2), pages 423-482, March.

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    More about this item

    Keywords

    intertemporal choice and growth; discounting; government environmental policy; externalities; environmental taxes; voting equilibrium;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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