Habit in Pollution. A Challenge for Intergenerational Equity
AbstractIn this article we extend the recent literature on overlapping generations and pollution by allowing each generation’s utility to depend on past levels of pollution. To conform with the literature on habit in consumption we call this extension habit in pollution. Habit in pollution can visualize itself as either a concern for the flow of pollution only, or for the stock, or anything in between. We show that habit in pollution has not only significant consequences for the level of pollution and capital, but also for the evolution of utility over time. We observe that habit in pollution can lead to violations of two standard criteria of sustainability, which suggests that habit in pollution can be another source of intergenerational inequity.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2006004.
Date of creation: 01 Dec 2006
Date of revision:
Other versions of this item:
- SCHUMACHER, Ingmar & ZOU, Benteng, 2006. "Habit in pollution. A challenge for intergenerational equity," CORE Discussion Papers 2006006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-25 (All new papers)
- NEP-ENV-2006-03-25 (Environmental Economics)
- NEP-RES-2006-03-25 (Resource Economics)
- NEP-UPT-2006-03-25 (Utility Models & Prospect Theory)
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