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On the Demand of Environmental Goods with Intertemporally Dependent Preferences

Author

Listed:
  • José Belbute

    () (Department of Economics, University of Évora)

  • Paulo Brito

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

Abstract

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.

Suggested Citation

  • José Belbute & Paulo Brito, 2006. "On the Demand of Environmental Goods with Intertemporally Dependent Preferences," Economics Working Papers 07_2006, University of Évora, Department of Economics (Portugal).
  • Handle: RePEc:evo:wpecon:07_2006
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    File URL: http://hdl.handle.net/10174/8440
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    References listed on IDEAS

    as
    1. Bengt Kristrom & Pere Riera, 1996. "Is the income elasticity of environmental improvements less than one?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 7(1), pages 45-55, January.
    2. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    3. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Intertemporal Dependent Preferences; Environmental Economics; Consumer Behavior; Dynamic Systems; Stability;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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