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Pollution, Unequal Lifetimes and Fairness

Listed author(s):
  • Grégory Ponthière

    (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

Pollution is a major cause of mortality, leading to substantial inequalities in lifetime well-being across individuals. This paper characterizes the optimal level of pollution in a two-period OLG economy where pollution deteriorates survival conditions. We compare two long-run social optima: on the one hand, the average utilitarian optimum, where the long-run average well-being is maximized, and, on the other hand, the ex post egalitarian optimum, where the well-being of the worst-o¤ at the stationary equilibrium is maximized. It is shown that the ex post egalitarian optimum involves a higher level of pollution in comparison with the utilitarian optimum. This result is robust to introducing health expenditures in the survival function. Finally, we examine the decentralization of those two social optima, and we compare the associated optimal taxes on capital income aimed at internalizing the pollution externality.

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Paper provided by HAL in its series PSE - Labex "OSE-Ouvrir la Science Economique" with number hal-01095463.

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Date of creation: Dec 2014
Handle: RePEc:hal:pseose:hal-01095463
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