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On Intertemporal Dependent Preferences with regard Environmental Goods and Services

Listed author(s):
  • José Manuel Madeira Belbute

    ()

    (Department of Economics, University of Évora)

  • Paulo Brito

    (Technical University of Lisbon ? Instituto Superior de Economia e Gestão)

This note extends the standard theory of intertemporal consumer preferences with regard environmental goods and services. It proposes an intertemporal dependent preferences framework that generates a ?persistence effect? consistent with consumer?s environmental friendly behaviours. Given the present civilizational and cultural pattern of preferences, consumers need to endure a learning-by-consuming process to full enjoy (and use) them, in order to commit himself with ?green-economic behaviors". The contribution to the existing literature is two fold. First we consider the presence of habit-formation with regard the consumption of environmental goods and services in a two goods framework. Secondly, we establish a consistent preference structure that displays a bounded adjacent complementarity in the consumption of environmental goods and services and present the correspondent properties that need to bee fulfilled by the utility function.These extensions will allow new advances in environmental economics, especially in the complete characterization of the demand for environmental goods and services and for the sustainable growth debate.

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File URL: http://hdl.handle.net/10174/8438
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Paper provided by University of Évora, Department of Economics (Portugal) in its series Economics Working Papers with number 06_2006.

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Length: 6 pages
Date of creation: 2006
Handle: RePEc:evo:wpecon:06_2006
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  1. Christopher D Carroll, 2000. "Solving Consumption Models with Multiplicative Habits," Economics Working Paper Archive 421, The Johns Hopkins University,Department of Economics.
  2. Christopher D. Carroll & Jody Overland & David N. Weil, 1997. "Comparison Utility in a Growth Model," NBER Working Papers 6138, National Bureau of Economic Research, Inc.
  3. repec:fth:jonhop:357 is not listed on IDEAS
  4. Wan, Henry, 1970. "Optimal Saving Programs under Intertemporally Dependent Preferences," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(3), pages 521-547, October.
  5. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
  6. G. Constantinides, 1990. "Habit formation: a resolution of the equity premium puzzle," Levine's Working Paper Archive 1397, David K. Levine.
  7. Christopher D. Carroll & Jody Overland & David N. Weil, 1995. "Saving and growth with habit formation," Finance and Economics Discussion Series 95-42, Board of Governors of the Federal Reserve System (U.S.).
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