Optimal Waste Control with Abatement and Productive Capital Stocks
AbstractIn this paper we address the control problem of a social optimum in presence of waste and capital stocks. We address this problem in two stages. In the first, we suppose that output is fixed; next, we endogenize output allowing for growth. The analytical framework is simple. Consumption is assumed to generate an undesirable residue. Society can control waste accumulation using abatement capital, and rise output using productive capital which accumulates over time. We have three main results. (1) On the analytical ground we are able to find a closed form solution to the optimal consumption with waste, abatement and productive capital stocks. (2) For the case of fixed output, we get a solution where stocks and flows affect the dynamics of the system. Environmental policies may have permanent effects on the level of variables. Then, (3) when waste and abatement capital are embedded in a classical growth model, we obtain an Environmental Keynes-Ramsey rule which states that the growth rate of the productive capital is positive if and only if its net marginal productivity is greater than the net social cost it generates, given by the marginal disutility of waste weighted by its shadow cost.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini in its series Working Papers with number 1301.
Length: 33 pages
Date of creation: 2013
Date of revision: 2013
Abatement capital; waste accumulation; optimal control; Pigouvian taxes and subsidies; output growth;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- 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-2013-01-26 (All new papers)
- NEP-DGE-2013-01-26 (Dynamic General Equilibrium)
- NEP-ENV-2013-01-26 (Environmental Economics)
- NEP-MAC-2013-01-26 (Macroeconomics)
- NEP-RES-2013-01-26 (Resource Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Smith, Vernon L, 1972. "Dynamics of Waste Accumulation: Disposal Versus Recycling," The Quarterly Journal of Economics, MIT Press, vol. 86(4), pages 600-616, November.
- Frederick Ploeg & Cees Withagen, 1991.
"Pollution control and the Ramsey problem,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 1(2), pages 215-236, June.
- C. G. Plourde, 1972. "A Model of Waste Accumulation and Disposal," Canadian Journal of Economics, Canadian Economics Association, vol. 5(1), pages 119-25, February.
- Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, January.
- William D. Nordhaus, 1982.
"How Fast Should We Graze the Global Commons?,"
Cowles Foundation Discussion Papers
615, Cowles Foundation for Research in Economics, Yale University.
- Anastasios Xepapadeas, 1999.
"Environmental Policy and Firm Behavior: Abatement Investment and Location Decisions Under Uncertainty and Irreversibility,"
NBER Technical Working Papers
0243, National Bureau of Economic Research, Inc.
- Anastasios Xepapadeas, 2001. "Environmental Policy and Firm Behavior: Abatement Investment and Location Decisions under Uncertainty and Irreversibility," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 281-308 National Bureau of Economic Research, Inc.
- Smulders, J.A. & Gradus, R.H.J.M., 1993.
"Pollution abatement and long-term growth,"
1993-73, Tilburg University, Center for Economic Research.
- Lin, Tyrone T. & Ko, Chuan-Chuan & Yeh, Hsin-Ni, 2007. "Applying real options in investment decisions relating to environmental pollution," Energy Policy, Elsevier, vol. 35(4), pages 2426-2432, April.
- Lans Bovenberg, A. & Smulders, Sjak, 1995.
"Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model,"
Journal of Public Economics,
Elsevier, vol. 57(3), pages 369-391, July.
- Smulders, J.A., 1995. "Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153411, Tilburg University.
- Pindyck, Robert S., 2002. "Optimal timing problems in environmental economics," Journal of Economic Dynamics and Control, Elsevier, vol. 26(9-10), pages 1677-1697, August.
- Hartwick, John M., 1990.
"Natural resources, national accounting and economic depreciation,"
Journal of Public Economics,
Elsevier, vol. 43(3), pages 291-304, December.
- John M. Hartwick, 1990. "Natural Resources, National Accounting and Economic Depreciation," Working Papers 771, Queen's University, Department of Economics.
- Xepapadeas, A. P., 1992. "Environmental policy, adjustment costs, and behavior of the firm," Journal of Environmental Economics and Management, Elsevier, vol. 23(3), pages 258-275, November.
- Solow, Robert M, 1986. " On the Intergenerational Allocation of Natural Resources," Scandinavian Journal of Economics, Wiley Blackwell, vol. 88(1), pages 141-49.
- Ansar, Jasmin & Sparks, Roger, 2009. "The experience curve, option value, and the energy paradox," Energy Policy, Elsevier, vol. 37(3), pages 1012-1020, March.
- Saltari, Enrico & Travaglini, Giuseppe, 2011. "The effects of environmental policies on the abatement investment decisions of a green firm," Resource and Energy Economics, Elsevier, vol. 33(3), pages 666-685, September.
- Pindyck, Robert S., 2000.
"Irreversibilities and the timing of environmental policy,"
Resource and Energy Economics,
Elsevier, vol. 22(3), pages 233-259, July.
- Pindyck, Robert S., 1998. "Irreversibilities and the timing of environmental policy," Working papers WP 4047-98., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Withagen, C.A.A.M., 1995.
"Pollution, abatement and balanced growth,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-3107031, Tilburg University.
- Dasgupta, Partha & M Ler, Karl-G Ran, 2000. "Net national product, wealth, and social well-being," Environment and Development Economics, Cambridge University Press, vol. 5(01), pages 69-93, February.
- Elettra Agliardi & Luigi Sereno, 2011.
"Environmental Protection, Public Finance Requirements and the Timing of Emission Reductions,"
Working Paper Series
53_11, The Rimini Centre for Economic Analysis.
- Agliardi, Elettra & Sereno, Luigi, 2012. "Environmental protection, public finance requirements and the timing of emission reductions," Environment and Development Economics, Cambridge University Press, vol. 17(06), pages 715-739, December.
- Becker, Robert A., 1982. "Intergenerational equity: The capital-environment trade-off," Journal of Environmental Economics and Management, Elsevier, vol. 9(2), pages 165-185, June.
- Lin, Tyrone T. & Huang, Shio-Ling, 2010. "An entry and exit model on the energy-saving investment strategy with real options," Energy Policy, Elsevier, vol. 38(2), pages 794-802, February.
- Rafael Lusky, 1976. "A Model of Recycling and Pollution Control," Canadian Journal of Economics, Canadian Economics Association, vol. 9(1), pages 91-101, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carmela Nicoletti).
If references are entirely missing, you can add them using this form.