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Habit in pollution. A challenge for intergenerational equity

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  • SCHUMACHER, Ingmar
  • ZOU, Benteng

Abstract

In this article we extend the recent literature on overlapping generations and pollution by allowing each generation’s utility to depend on past levels of pollution. To conform with the literature on habit in consumption we call this extension habit in pollution. Habit in pollution can visualize itself as either a concern for the flow of pollution only, or for the stock, or anything in between. We show that habit in pollution has not only significant consequences for the level of pollution and capital, but also for the evolution of utility over time. We observe that habit in pollution can lead to violations of two standard criteria of sustainability, which suggests that habit in pollution can be another source of intergenerational inequity.

Suggested Citation

  • SCHUMACHER, Ingmar & ZOU, Benteng, 2006. "Habit in pollution. A challenge for intergenerational equity," CORE Discussion Papers 2006006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2006006
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    File URL: https://uclouvain.be/en/research-institutes/immaq/core/dp-2006.html
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    References listed on IDEAS

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    1. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
    2. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
    3. de la Croix, David, 1996. "The dynamics of bequeathed tastes," Economics Letters, Elsevier, vol. 53(1), pages 89-96, October.
    4. Scitovsky, Tibor, 1992. "The Joyless Economy: The Psychology of Human Satisfaction," OUP Catalogue, Oxford University Press, number 9780195073478.
    5. Lind, Robert C, 1995. "Intergenerational equity, discounting, and the role of cost-benefit analysis in evaluating global climate policy," Energy Policy, Elsevier, vol. 23(4-5), pages 379-389.
    6. Seegmuller, Thomas & Verchere, Alban, 2004. "Pollution as a source of endogenous fluctuations and periodic welfare inequality in OLG economies," Economics Letters, Elsevier, vol. 84(3), pages 363-369, September.
    7. Richard B. Howarth, 1997. "Sustainability as Opportunity," Land Economics, University of Wisconsin Press, vol. 73(4), pages 569-579.
    8. John C. V. Pezzey, 1997. "Sustainability Constraints versus "Optimality" versus Intertemporal Concern, and Axioms versus Data," Land Economics, University of Wisconsin Press, vol. 73(4), pages 448-466.
    9. repec:ebl:ecbull:v:4:y:2002:i:7:p:1-10 is not listed on IDEAS
    10. Ronald Wendner, 2002. "Capital Accumulation and Habit Formation," Economics Bulletin, AccessEcon, vol. 4(7), pages 1-10.
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    More about this item

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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