IDEAS home Printed from https://ideas.repec.org/p/zbw/vfsc15/113135.html
   My bibliography  Save this paper

Self-enforcing intergenerational social contract as a source of Pareto improvement and emission mitigation

Author

Listed:
  • Burghaus, Kerstin
  • Dao, Thang Nguyen
  • Edenhofer, Ottmar

Abstract

We consider, in a general equilibrium overlapping generations (OLG) model with environmental externalities, a contract between successive generations, whereby agents of the current working-age generation privately invest a share of their labor income in pollution mitigation in exchange for a transfer to their old-age capital income paid by the next generation. We analyze under which conditions there exist contracts which are Pareto-improving compared to an equilibrium without contract and characterize the set of Pareto-improving mitigation-transfer combinations, the Pareto frontier and the Nash bargaining solution. Further, we prove that steady state emissions under a Pareto-improving contract are lower than without a contract. In the second part of the paper, we study a non-cooperative setting, taking into account that credibly committing to a contract might not be possible. We show that there exists mitigation transfer schemes which are both Pareto-improving and give no generation an incentive to deviate from the provisions of the contract.

Suggested Citation

  • Burghaus, Kerstin & Dao, Thang Nguyen & Edenhofer, Ottmar, 2015. "Self-enforcing intergenerational social contract as a source of Pareto improvement and emission mitigation," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113135, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc15:113135
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/113135/1/VfS_2015_pid_500.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andersen, Torben M. & Bhattacharya, Joydeep & Liu, Pan, 2020. "Resolving intergenerational conflict over the environment under the Pareto criterion," Journal of Environmental Economics and Management, Elsevier, vol. 100(C).
    2. Andersen, Torben M. & Bhattacharya, Joydeep & Liu, Pan, 2018. "A way to resolve intergenerational conflict over the environment under the Pareto criterion using green bonds," ISU General Staff Papers 201808240700001070, Iowa State University, Department of Economics.

    More about this item

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc15:113135. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/vfsocea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.