Environmental and population externalities
In this paper, we investigate the external effects of the parent's decisions on the number of newly born children and the firm's decisions on the amount of polluting emissions that occur in industrial production. We employ an optimal control model which comprises three stock variables representing population, the economic capital stock and the pollutant immissions in the natural environment. We distinguish two different types of households, in which the decision on the number of births takes place. These two types may be regarded as two extremes: dynastic households, in which the family sticks together forever and micro-households, in which children leave their parent's household immediately after birth. We conclude that in both cases the decentralized outcome is not optimal due to two externalities: one occurs in the individual decision on polluting emissions, the other one in the individual decision on the number of births. It turns out that whereas the environmental externality is of the same form in both cases, the type of external effect from the household's decision on fertility is qualitatively different. The different types of population externalities require different policy instruments in order to internalize them. We discuss a Pigouvian tax on emissions as well as taxes on population: if an appropriate tax on the household size is applied in the case of dynastic households and an appropriate tax on children is applied in the case of small households a first best development of the economy is obtained.
(This abstract was borrowed from another version of this item.)
Volume (Year): 15 (2010)
Issue (Month): 01 (February)
|Contact details of provider:|| Postal: |
Web page: http://journals.cambridge.org/jid_EDE
References listed on IDEAS
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.:
- Till Requate & Mark B. Cronshaw, 1997. "Population size and environmental quality," Journal of Population Economics, Springer, vol. 10(3), pages 299-316.
- Rüdiger Pethig, 2005.
"Nonlinear Production, Abatement, Pollution and Materials Balance Reconsidered,"
CESifo Working Paper Series
1549, CESifo Group Munich.
- 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.
- 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.
- 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.
- Michel, P., 1980.
"On the Transversality Condition in Infinite Horizon Optimal Problems,"
Cahiers de recherche
8024, Universite de Montreal, Departement de sciences economiques.
- Michel, Philippe, 1982. "On the Transversality Condition in Infinite Horizon Optimal Problems," Econometrica, Econometric Society, vol. 50(4), pages 975-85, July.
- 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
- Srinivasan, T.N. & Robinson, J.A., 1995. "Long-Term Consequences of Population Growth: Technological Change, Natural Resources, and the Environment," Papers 748, Yale - Economic Growth Center.
- Harford, Jon D, 1998. "The Ultimate Externality," American Economic Review, American Economic Association, vol. 88(1), pages 260-65, March.
- 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.
- Raut, L K & Srinivasan, T N, 1994. "Dynamics of Endogenous Growth," Economic Theory, Springer, vol. 4(5), pages 777-90, August.
- 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.
When requesting a correction, please mention this item's handle: RePEc:cup:endeec:v:15:y:2010:i:01:p:1-19_00. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.