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The Effects of Emission Permits on Growth and the Environment

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  • Tetsuo Ono

Abstract

We develop an overlapping generations model of growth and the environment in which industrial firms produce environmentally harmful emissions. A government controls the emissions by assigning emission quotas to firms, and permits could be issued and freely traded as financial instruments across firms on the basis of the quotas. We show that an environmental policy that decreases an aggregate number of emission quotas could degenerate economic growth and lower environmental quality in the long run. We also show the implications of this result for environmental policy. Copyright Kluwer Academic Publishers 2002

Suggested Citation

  • Tetsuo Ono, 2002. "The Effects of Emission Permits on Growth and the Environment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 75-87, January.
    • Handle: RePEc:kap:enreec:v:21:y:2002:i:1:p:75-87
    DOI: 10.1023/A:1014595532338
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    More about this item

    Keywords

    economic growth; emission permit; environmental quality; overlapping generations;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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