Pollution Decay, Consumer Awareness and Optimal Carbon Taxes
AbstractThe effects of non-linear decay and consumer preferences are analyzed in a setting where optimal extraction of non-renewable resources is combined with stock externalities. The control is exercised via a corrective tax and the time horizon is divided into two periods: an initial phase with extraction and a terminal phase without extraction. The time horizon with extraction is determined endogenously. The model does not assume separability of the objective function. Sensitivity results indicate large differences in the optimal extraction period, the total level of extraction and cumulative emissions depending on the form of the decay function and the presence of consumers’ awareness for the environment.
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Bibliographic InfoPaper provided by Department of Business and Management Science, Norwegian School of Economics in its series Discussion Papers with number 2004/7.
Length: 31 pages
Date of creation: 01 Jun 2004
Date of revision:
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Global warming; fossil fuel extraction; dynamic optimisation;
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
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
- Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
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