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Optimal dynamic scale and structure of a multi-pollution economy

Author

Listed:
  • Stefan Baumgärtner

    (Centre of Sustainable Management, Leuphana University of Lüneburg)

  • Frank Jöst

    (Alfred-Weber-Institute of Economics, Universtity of Heidelberg)

  • Ralph Winkler

    (Center of Economic Research,ETH Swiss Federal Institute of Technology)

Abstract

We analyze the optimal dynamic scale and structure of a two-sector-economy, where each sector produces one consumption good and ons specific pollutant. Both pollutants accumulate at different rates to stocks which damage the natural environment. This acts as a dynamic driving force for the economy. Our analysis shows that along the optimal time-path (i) the overall scale of economic acticity may be less than maximal; (ii) the time sclae economic dynamics (change of scale and structure) is mainly determined by the lifetime of pollutNTS, their harmfulness and the discount rate; and (iii) the optimal control of economic scale and structure may be non-monotonic. These results raise important questions about the optimal design of environmental policies.

Suggested Citation

  • Stefan Baumgärtner & Frank Jöst & Ralph Winkler, 2007. "Optimal dynamic scale and structure of a multi-pollution economy," Working Paper Series in Economics 50, University of Lüneburg, Institute of Economics.
    • Handle: RePEc:lue:wpaper:50
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    Cited by:

    1. Legras, Sophie, 2011. "Incomplete model specification in a multi-pollutants setting: The case of climate change and acidification," Resource and Energy Economics, Elsevier, vol. 33(3), pages 527-543, September.
    2. Ralph Winkler, 2008. "Optimal control of pollutants with delayed stock accumulation," CER-ETH Economics working paper series 08/91, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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    More about this item

    Keywords

    dynamoic economy-environment interaction; multi-pollutant emissions; non-monotonic control; optimal scale; stock pollution; structural change; time scale;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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