On the Demand of Environmental Goods with Intertemporally Dependent Preferences
AbstractIn 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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Bibliographic InfoPaper provided by University of Évora, Department of Economics (Portugal) in its series Economics Working Papers with number 07_2006.
Length: 17 pages
Date of creation: 2006
Date of revision:
Intertemporal Dependent Preferences; Environmental Economics; Consumer Behavior; Dynamic Systems; Stability;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - 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
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