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Optimal dynamic scale and structure of a multi-pollution economy

  • 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.

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Metadaten
Author:Stefan Baumgärtner, Frank Jöst, Ralph Winkler
URL: https://pub-data.leuphana.de/frontdoor/index/index/docId/508
Document Type:ResearchPaper
Language:English
Year of Completion:2007
Date of Publication (online):2007/08/20
Release Date:2007/08/20
Tag:dynamic economy-environment interaction; multi-pollutant emissions; non-monotonic control; optimal scale; stock pollution
GND Keyword:Ökonomie <Begriff>; Ökologie; Emission; Wertpapieremission
Institutes:Universität / Frühere Fachbereiche
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft