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On the Demand of Environmental Goods with Intertemporally Dependent Preferences

  • José Belbute

    ()

    (Department of Economics, University of Évora)

  • Paulo Brito

    ()

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

In this paper, we use a simple framework to analyze two issues relating the canonical model of environmental economics. The first is related with the consistency between the intertemporal and the instantaneous structure of the utility function. The second is related with to the specific stability and dynamic properties of the model and to its response to relative price and income exogenous changes. We find that, if there is bounded adjacent complementarity in demand for environmental goods, intertemporal independence in the demand for the other goods and if the utility function displays goods separability, then there will be short-run complementarity between the stock of tastes and the financial wealth. Increases in income will rise the long-run demand for environmental good while increases in the relative price will decrease it.

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File URL: http://hdl.handle.net/10174/8440
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Paper provided by University of Évora, Department of Economics (Portugal) in its series Economics Working Papers with number 07_2006.

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Length: 17 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:evo:wpecon:07_2006
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