Optimal growth with pollution : how to use pollution permits ?
AbstractWe study optimal growth and its decentralization in an overlapping generations model. The decentralization of an optimal path needs some specific taxes in addition to lump-sum transfers if there are externalities. The introduction of market of permits allows neutralizing the external environmental effects. We shows that there is a unique management of permits such that the equilibrium coincides with the optimal path : all permits should be auctioned i.e. no permits to firms. This conclusion is in contradiction with the usual pratice of grandfathering.
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Bibliographic InfoPaper provided by Université Panthéon-Sorbonne (Paris 1) in its series Cahiers de la Maison des Sciences Economiques with number v04012.
Length: 21 pages
Date of creation: Feb 2004
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Optimal growth; environment; market of permits.;
Other versions of this item:
- Jouvet, Pierre-Andre & Michel, Philippe & Rotillon, Gilles, 2005. "Optimal growth with pollution: how to use pollution permits?," Journal of Economic Dynamics and Control, Elsevier, vol. 29(9), pages 1597-1609, September.
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D9 - Microeconomics - - Intertemporal Choice
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-12-12 (All new papers)
- NEP-ENE-2004-12-12 (Energy Economics)
- NEP-ENV-2004-12-12 (Environmental Economics)
- NEP-RES-2004-12-12 (Resource Economics)
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