Investment Choice with Polluted Capital
AbstractThis paper develops a two-sector overlapping generations model in which one sector produces an externality on the environmental quality and the other has no effect. We assume that environmental quality degradation results from production activity of one sector. Then, we characterize the dynamical system globally and establish sufficient conditions for the global uniqueness of a perfect-foresight equilibrium path in the case of a Cobb-Douglas production function and a CES utility function. We show that the existence and the stability of the steady stare depend on subtitution and income effect and on the degree of pollution.
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Bibliographic InfoPaper provided by UniversitÃ© PanthÃ©on-Sorbonne (Paris 1) in its series Papiers d'Economie MathÃ©matique et Applications with number 98.21.
Length: 22 pages
Date of creation: 1998
Date of revision:
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ENVIRONMENT ; CAPITAL ; ECONOMIC GROWTH;
Other versions of this item:
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
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- Chevallier, Julien & Etner, Johanna & Jouvet, Pierre-André, 2011.
"Bankable emission permits under uncertainty and optimal risk-management rules,"
Economics Papers from University Paris Dauphine
123456789/5385, Paris Dauphine University.
- Chevallier, Julien & Etner, Johanna & Jouvet, Pierre-André, 2011. "Bankable emission permits under uncertainty and optimal risk-management rules," Research in Economics, Elsevier, vol. 65(4), pages 332-339, December.
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