Intergenerational Transfers of Pollution Rights and Growth
Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)
GREMARS & University of Lille
Center for Operations Research and Econometrics (CORE)
CORE Discussion Paper No. 2005/42
We develop an overlapping generations growth model in which the individuals care about the environment. Many environmental policies suffer from institutional failures. We focus on the failure resulting from the delegation by the government of the exercise of the environmental policy to an administrative department. Though motivated by the department's expertise, the delegation principle may give rise to a conflict with social welfare maximization. This paper proposes an original policy mechanism of transfers of pollution rights capable of circumventing these failures and decentralizing optimal growth at competitive equilibrium.
Number of Pages in PDF File: 22
Keywords: Pollution, optimal growth, overlapping generations
JEL Classification: D91, Q20, D64working papers series
Date posted: July 28, 2005
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