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On The Implication Of Environmental Policy On Growth In An Olg Model With Pollution Permits And Irreversible Pollution

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Author Info

  • Alain Jean-Marie

    ()
    (LIRMM - Laboratoire d'Informatique de Robotique et de Microélectronique de Montpellier - CNRS : UMR5506 - Université Montpellier II - Sciences et Techniques du Languedoc)

  • Fabien Prieur

    ()
    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579, LAMETA - Laboratoire Montpellierain d'économie théorique et appliquée - CNRS : UMR5474 - INRA : UR1135 - CIHEAM - Université Montpellier I - Montpellier SupAgro)

  • Mabel Tidball

    ()
    (LAMETA - Laboratoire Montpellierain d'économie théorique et appliquée - CNRS : UMR5474 - INRA : UR1135 - CIHEAM - Université Montpellier I - Montpellier SupAgro)

Abstract

This paper develops an OLG model with emissions arising from production and potential irreversible pollution. Pollution control goes through a system of permits and private agents can also maintain the environment. In this setting, we prove that there exist multiple equilibria. Due to the possible irreversibility, the economy can be dragged into both stationary and asymptotic poverty traps. First, we show that choosing a global quota on emissions at the lowest level beyond a critical threshold is a means to avoid the two types of traps. Next, we analyze the impact of a political reform on other equilibria. When the agents do not engage in maintenance, a fall in the quota implies a reduction of pollution but is detrimental to capital accumulation while, in the other case, it procures a double dividend.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00352691.

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Date of creation: 21 Mar 2007
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Handle: RePEc:hal:wpaper:halshs-00352691

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00352691/en/
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Related research

Keywords: overlapping generations; irreversible pollution; poverty trap; pollution permits;

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