On the Demand of Environmental Goods with Intertemporally Dependent Preferences

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On the Demand of Environmental Goods with Intertemporally Dependent Preferences

Author Info

José Belbute () (Department of Economics, University of Évora Author-Name Paulo Brito, Technical University of Lisbon – Instituto Superior de Economia e Gestão)

Additional information is available for the following registered author(s):

José Manuel Belbute

Abstract

In this paper, we use a simple framework to analyze two issues relating the canonical model of environmental economics. The first is related with the consistency between the intertemporal and the instantaneous structure of the utility function. The second is related with to the specific stability and dynamic properties of the model and to its response to relative price and income exogenous changes. We find that, if there is bounded adjacent complementarity in demand for environmental goods, intertemporal independence in the demand for the other goods and if the utility function displays goods separability, then there will be short-run complementarity between the stock of tastes and the financial wealth. Increases in income will rise the long-run demand for environmental good while increases in the relative price will decrease it.

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Publisher Info
Paper provided by University of Évora, Department of Economics (Portugal) in its series Economics Working Papers with number 07_2006.

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Length: 17 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:evo:wpecon:07_2006

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For technical questions regarding this item, or to correct its listing, contact: (José Manuel Madeira Belbute).

Find related papers by JEL classification:
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
E20 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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)

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