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Balancing “today” and “tomorrow”: The role of environmental regulation in harmonizing intergenerational utility

Author

Listed:
  • Chang, Hongwang
  • Chen, Yushuo
  • Liu, Li
  • Wang, Tao
  • Yang, Pingjian

Abstract

Environmental policy aims to ensure sustainable, green, and healthy economic growth through macroeconomic regulation. In the absence of a central planner, the current generation is likely to impose the negative externalities of its economic growth on future generations. This situation could lead to unsustainable economic development and severe environmental problems. Environmental regulation, with its unique characteristics, is increasingly recognized as a primary policy tool for addressing such environmental challenges. This paper theoretically examines the effects of environmental regulation on intergenerational utility using a two-period overlapping generations (OLG) model. Through simulations and empirical tests, we explore how environmental regulation harmonizes environmental quality with economic growth by promoting cleaner energy consumption and technological progress. Our analysis provides theoretical pathways for achieving this compatibility and offers policy insights to guide the development of effective environmental regulation. The study provides a framework for designing policies tailored to different stages of development and sectors, offering practical guidance for sustainable economic growth.

Suggested Citation

  • Chang, Hongwang & Chen, Yushuo & Liu, Li & Wang, Tao & Yang, Pingjian, 2026. "Balancing “today” and “tomorrow”: The role of environmental regulation in harmonizing intergenerational utility," Energy Policy, Elsevier, vol. 208(C).
    • Handle: RePEc:eee:enepol:v:208:y:2026:i:c:s0301421525004136
    DOI: 10.1016/j.enpol.2025.114906
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