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Environmental and population externalities

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  • JÖST, FRANK
  • QUAAS, MARTIN F.

Abstract

We analyze the external effects that arise in the decisions of firms on polluting emissions and in the decisions of parents on the number of births in an optimal control model with three stock variables representing population, economic capital, and pollution. We distinguish two different types of households, which represent opposite ends of a spectrum of potential familial structures: ‘dynastic households’, in which the family sticks together forever and ‘micro-households’, in which children leave their parent's household immediately after birth. We show that the decision of parents on the number of births involves an externality that is qualitatively different for both types of familial structure. Hence, population policy should be different, according to the type of household. A first best result may be obtained in the case of dynastic households if an appropriate tax on the household size is applied, or, in the case of micro-households, if an appropriate tax on children is applied.

Suggested Citation

  • Jöst, Frank & Quaas, Martin F., 2010. "Environmental and population externalities," Environment and Development Economics, Cambridge University Press, vol. 15(01), pages 1-19, February.
  • Handle: RePEc:cup:endeec:v:15:y:2010:i:01:p:1-19_00
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    References listed on IDEAS

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    1. Partha Dasgupta, 2000. "Population and Resources: An Exploration of Reproductive and Environmental Externalities," Population and Development Review, The Population Council, Inc., vol. 26(4), pages 643-689.
    2. Edward L. Glaeser & Gary S. Becker & Kevin M. Murphy, 1999. "Population and Economic Growth," American Economic Review, American Economic Association, vol. 89(2), pages 145-149, May.
    3. Pethig, Rudiger, 2006. "Non-linear production, abatement, pollution and materials balance reconsidered," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 185-204, March.
    4. Till Requate & Mark B. Cronshaw, 1997. "Population size and environmental quality," Journal of Population Economics, Springer;European Society for Population Economics, vol. 10(3), pages 299-316.
    5. David N. Weil & Oded Galor, 1999. "From Malthusian Stagnation to Modern Growth," American Economic Review, American Economic Association, vol. 89(2), pages 150-154, May.
    6. Michel, Philippe, 1982. "On the Transversality Condition in Infinite Horizon Optimal Problems," Econometrica, Econometric Society, vol. 50(4), pages 975-985, July.
    7. Robinson, James A. & Srinivasan, T.N., 1993. "Long-term consequences of population growth: Technological change, natural resources, and the environment," Handbook of Population and Family Economics,in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 21, pages 1175-1298 Elsevier.
    8. Harford, Jon D., 1997. "Stock Pollution, Child-Bearing Externalities, and the Social Discount Rate," Journal of Environmental Economics and Management, Elsevier, vol. 33(1), pages 94-105, May.
    9. Harford, Jon D, 1998. "The Ultimate Externality," American Economic Review, American Economic Association, vol. 88(1), pages 260-265, March.
    10. Raut, L K & Srinivasan, T N, 1994. "Dynamics of Endogenous Growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(5), pages 777-790, August.
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    JEL classification:

    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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