IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Emerging environmental problems, irreversible remedies, and myopia in a two country setup

  • Michel Moreaux
  • Pierre Lasserre
  • Marcel Boyer

[fre] Avec la croissance apparaissent de nouveaux besoins de protection de l'environnement. Nous étudions les règles d'investissement optimales lorsque les décisions sont irréversibles et les dépenses indivisibles. Une attitude myope consistant à ne prendre en compte que les données immédiates du problème sans considération des investissements futurs ni de ceux d'autres juridictions simplifie énormément l'analyse et mène dans certains cas aux décisions optimales. Dans un modèle à deux pays où chaque pays bénéficie des investissements de l'autre, la chronologie d'investissement choisie lorsque les pays doivent investir tour à tour constitue également un équilibre lorsque l'ordre d'intervention est endogène. [eng] As development proceeds, the demand for environmental protection increases. We study optimal investment decision rules when protection investments are irreversible and indivisible. We show that myopia (focusing on one particular outlay without considering investments that are to come later in the sequence or are to be made by another jurisdiction) does not lead to errors in timing but greatly simplifies decision analysis. In a two country setup where each outlay benefits both countries, we also find that the equilibrium time sequence that arises when both countries must take turns to invest is also an equilibrium when the order is endogenous.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://dx.doi.org/10.3406/rei.1998.1698
Download Restriction: no

File URL: http://www.persee.fr/articleAsPDF/rei_0154-3229_1998_num_83_1_1698/rei_0154-3229_1998_num_83_1_1698.pdf?mode=light
Download Restriction: no

Article provided by Programme National Persée in its journal Revue d'économie industrielle.

Volume (Year): 83 (1998)
Issue (Month): 1 ()
Pages: 47-61

as
in new window

Handle: RePEc:prs:recind:rei_0154-3229_1998_num_83_1_1698
Note: DOI:10.3406/rei.1998.1698
Contact details of provider: Web page: http://www.persee.fr/web/revues/home/prescript/revue/rei

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.:

as in new window
  1. Andrew B. Abel & Avinash K. Dixit & Janice B. Eberly & Robert S. Pindyck, . "Options, the Value of Capital, and Investment," Rodney L. White Center for Financial Research Working Papers 15-95, Wharton School Rodney L. White Center for Financial Research.
  2. Pindyck, Robert S, 1991. "Irreversibility, Uncertainty, and Investment," Journal of Economic Literature, American Economic Association, vol. 29(3), pages 1110-48, September.
  3. Leahy, John V, 1993. "Investment in Competitive Equilibrium: The Optimality of Myopic Behavior," The Quarterly Journal of Economics, MIT Press, vol. 108(4), pages 1105-33, November.
  4. Baranzini, A. & Chesney, M. & Morisset, J., 1994. "Uncertainty and Global Warming Policy," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 94.11, Institut d'Economie et Econométrie, Université de Genève.
  5. Coggins, Jay S. & Ramezani, Cyrus A., 1998. "An Arbitrage-Free Approach to Quasi-Option Value," Journal of Environmental Economics and Management, Elsevier, vol. 35(2), pages 103-125, March.
  6. Boyer, M. & Lasserre, P. & Mariotti, T. & Moreaux, M., 1998. "Industry Development under Alternative Market Structures," Papers 98.497, Toulouse - GREMAQ.
  7. Avinash Dixit, 1992. "Investment and Hysteresis," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 107-132, Winter.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:prs:recind:rei_0154-3229_1998_num_83_1_1698. 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: (Equipe PERSEE)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.