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Pollution, carrying capacity and the Allee effect


  • Stefano BOSI


In ecology, one of the simplest representation of population dynamics is the logistic equation. This basic view can be enriched by considering two important variables : (1) the maximal population density Nature cansupport (carrying capacity) and (2) the critical density threshold under which the population disappear (Allee effect). The economic literature on biodiversity and renewable resources ignores both these variables. Evidence suggests also that these variables are affected by the pollution leveldue to economic activity. Indeed, a degraded environment is unsuitablefor wildlife and reduces the carrying capacity, while the climate change entails the habitat fragmentation and, lowering the wildlife reproduction possibilities, raises the Allee effect. The present paper aims to incorporate both endogenous carrying capacity and Allee effect in a Ramsey model augmented with biodiversity as a renewable resource. Our extendedframework enables us to study the effect of a Pigouvian tax on anthropogenic mass extinction. We find that, when the household overvalues biodiversity with respect to consumption, a higher green-tax rate is beneficial in three respects entailing: (1) a lower pollution and a higher biodiversity, (2) a welfare improvement and (3) a less likely mass extinction.

Suggested Citation

  • Stefano BOSI & David DESMARCHELIER, 2018. "Pollution, carrying capacity and the Allee effect," Working Papers of BETA 2018-37, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  • Handle: RePEc:ulp:sbbeta:2018-37

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    Allea effect; carrying capacity; pollution; Ramsey model; logistic dynamics; Hopf bifurcation.;
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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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