Optimal dynamic scale and structure of a multi-pollution economy
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Chronological data
Date of first publication2007-08-20
Date of publication in PubData 2024-08-23
Language of the resource
English
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Abstract
We analyze the optimal dynamic scale and structure of a two-sectoreconomy, where each sector produces one consumption good and one specific pollutant. Both pollutants accumulate at di_erent 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 activity may be less than maximal; (ii) the time scale of economic dynamics (change of scale and structure) is mainly determined by the lifetime of pollutants, 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.
Keywords
Emission; Control; Stock Pollution; Ökonomie; Ökologie; Emission; Wertpapieremission
Series title
Number of the series contribution
50