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Scope of Economic Incentives and Abatement Technologies to Regulate a Natural System's Resilience in a General Equilibrium Model


  • David Tobón
  • Carlos Molina
  • Carlos Andrés Vasco


This paper discusses a general equilibrium model consisting of a productive sector generating externalities on another sector having clean production, and on consumers, affecting the property of resilience of a natural system that feeds the economic system. The scope of efficiency of economic incentives is analyzed simultaneously with production activities in the polluting sector and the use of a pollution abatement technology. Our model predicts a boomerang effect: the polluting sector could find itself in a worse situation in the equilibrium with externalities; this sector initiated the problem, but at the end it is highly affected. In any case, the use of economic incentives helps keep pollution levels to maintain more valuable equilibria of nature.

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  • David Tobón & Carlos Molina & Carlos Andrés Vasco, 2015. "Scope of Economic Incentives and Abatement Technologies to Regulate a Natural System's Resilience in a General Equilibrium Model," World Bank Economic Review, World Bank Group, vol. 29(suppl_1), pages 182-191.
  • Handle: RePEc:oup:wbecrv:v:29:y:2015:i:suppl_1:p:s182-s191.

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