Environmental maintenance in a dynamic model with heterogenous agents
AbstractWe 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.
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Bibliographic InfoPaper provided by European University at St. Petersburg, Department of Economics in its series EUSP Deparment of Economics Working Paper Series with number Ec-02/12.
Length: 32 pages
Date of creation: 27 Feb 2012
Date of revision:
intertemporal choice and growth; discounting; government environmental policy; externalities; environmental taxes; voting equilibrium;
Other versions of this item:
- BORISSOV, Kirill & BRECHET, Thierry & LAMBRECHT, Stéphane, 2012. "Environmental maintenance in a dynamic model with heterogenous agents," CORE Discussion Papers 2012008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Kirill Borissov & Thierry Brechet & Stephane Lambrecht, 2012. "Environmental maintenance in a dynamic model with heterogenous agents," CEEES Paper Series CE3S-02/12, European University at St. Petersburg, Department of Economics.
- D90 - Microeconomics - - Intertemporal Choice and Growth - - - 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-08 (All new papers)
- NEP-DGE-2012-03-08 (Dynamic General Equilibrium)
- NEP-ENV-2012-03-08 (Environmental Economics)
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