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on Environmental Economics |
| By: | Rafaela Pérez Sánchez (Universidad Complutense de Madrid); Jesús Ruiz (Universidad Complutense de Madrid) |
| Abstract: | We study the dynamic properties of an endogenous growth model with pollution in which the government can control the pollution through distorting taxes on the pollutant firms and through public abatement activities. First, we characterize the conditions for indeterminacy of equilibria when the government is benevolent and chooses its tax policy by taking into account the decentralized competitive equilibrium. Under this second best setup we show that two balanced growth paths can be found (one with a low level of pollution and the other with a high level) both of which can be locally indeterminate. Therefore, under indeterminacy, the optimal public policies do not guarantee that the economy will converge towards the steady state characterized by a low level of pollution and neither guarantee that the economy will display, along the transition, low levels of pollution. Second, we show that the central planner solution might also display indeterminacy; in particular, two Pigouvian taxes can be found. |
| Keywords: | Global and local indeterminacy, Environmental taxes, Pollution, Abatement, Pigouvian taxes |
| JEL: | H23 O41 Q28 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:cea:doctra:e2004_79&r=env |
| By: | J.Aznar-Márquez (Univ.Miguel Hernández d'Elx); J.R. Ruiz-Tamarit (Universitat de València) |
| Abstract: | When there are pollution externalities the competitive equilibrium is not Pareto-optimal nor environmentally sustainable even if abatement activities are endogenously decided. In this paper we introduce the possibility of an ecological catastrophe like the one predicted by the global climate change, imposing the constraint of an upper-limit to the pollutants stock. We characterize the socially optimal solution and study conditions for the sustainability of the balanced growth path. We find a trade-off between environmental quality and growth. The rate of growth depends negatively on the weight of environmental care in the utility function and positively on the population growth rate. We show that the emissions reduction recommended in the Kioto protocol is an appropriate policy to avoid the ecological catastrophe and ensure global efficiency and positive long-run growth. |
| Keywords: | Environment, Externalities, Optimal Growth, Ecological Catastrophe, Sustainability. |
| JEL: | C61 C62 O41 Q5 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:cea:doctra:e2004_80&r=env |
| By: | Eftichios S. Sartzetakis (University of Macedonia (Greece)and University College of the Cariboo) |
| Abstract: | This paper develops a simple model of the automobile market, in which significant network and environmental externalities are present, and examines consumers' choice of technology. There are two types of technology: one that currently dominates the market but imposes significant environmental costs, and one that is expected to be introduced and has zero environmental costs. We find that, in the absence of policy intervention, the benefits of the installed base and the price diferentials in favour of the existing technology will deter new users from adopting the clean technology. We consider diferent tax policies that will induce adoption provided it is welfare warranted. First, we analyze a tax policy on the dirty technology with the tax revenues generated being used for general purposes.Under this case, we find that the tax, to induce adoption, will be greater than the marginal environmental damage. Second, we consider the tax revenue generated from the dirty technology to be earmarked towards a future subsidy to the clean technology. In this case, the tax is found to be lower than the case where revenues are used for general purposes and more interesting is the fact that the tax can be set equal to the marginal damage. Finally, we examine the case where the government credibly commits a revenue neutral tax/subsidy policy prior to the introduction of the clean technology and we find that the tax and the subsidy expenditures required could be lower relative to the case without precommitment. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:cea:doctra:e2004_82&r=env |
| By: | Harrie A.A. Verbon (Tilburg University and Center); Cees A. Withagen (Tilburg University and Center; Free University Amsterdam and Tinbergen Institute) |
| Abstract: | A system of tradable permits in the standard setting is effective in attaining the policy objective with regard to pollution reduction at the least cost. This outcome is challenged in case of a tradable permit system in a federal state with individual states having discretionary power regarding environmental policy and where pollution is transboundary across states. This paper explores the opportunities of the central authority to influence the effectiveness of the system, under different institutional arrangements, through the initial allocation of permits |
| Keywords: | tradable permits, trade bans, fiscal federalism. |
| JEL: | H21 H23 Q00 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:cea:doctra:e2004_83&r=env |
| By: | Arguedas,Carmen (Tilburg University, Center for Economic Research) |
| Abstract: | We investigate the features of optimal regulatory policies composed of pollution standards and probabilities of inspection, where fines for non-compliance depend not only on the degree of violation but alson on nongravity factors. We show that optimal policies can induce either compliance or noncompliance with the standards, the latter being more plausible when monitoring costs are large and, surprisingly, when gravity-based fines are large. Also, both tghe convexity of the sanctions and the level of the non-gravity-based penalties play a key role as to whether optimal policies induce noncompliance. |
| JEL: | D82 K32 K42 L51 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200509&r=env |
| By: | Arguedas,Carmen (Tilburg University, Center for Economic Research) |
| Abstract: | We study optimal policies composed of pollution standards, probabilities of inspection and fines dependant on the degree of noncompliance with the standards, in a context where regulated firms own private information. In contrast with previous literature, we show that optimal policies, being either pooling or separating, can imply violations to strictly positive standards. This results crucially depends on the monitoring costs, the types of firms and the regulator's degree of uncertainty. |
| JEL: | D82 K32 K42 L51 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200510&r=env |
| By: | Vries,Frans P. de; Withagen,Cees (Tilburg University, Center for Economic Research) |
| Abstract: | A weak version of the Porter hypothesis claims that strict environmental policy provides positive innovation incentives, hence triggering improved competitiveness and securing environmental quality. In a comparative way, this paper empirically tests this hypothesis across countries by linking environmental stringency to innovation proxied by patents in the field of SO2 abatement over the period 1970-2000. Three different models of environmental stringency are examined. Two of these models do not reveal a positive significant effect on innovation as a result of increased stringency. In the theoretically preferred model, however, a positive relationship between environmental stringency and innovation is obtained. |
| JEL: | L51 L94 O31 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200518&r=env |
| By: | Pierre Regibeau; Katharine Rockett |
| Abstract: | We present survey results regarding a series of hypotheses on industry structure, regulation and patent policy towards GM food crops, focussing on the stages of the industry that generate innovations and approved products for sale to the farming sector. Licensing as a means of delegating litigation and regulatory costs comes out as one of the most consistent themes in our responses. We link this practice to a two-tiered industry structure, a weak relation between litigation threat and research trajectory, and a perception by our respondents that patents - as well as patent design - are "one step removed" from their research decisions. |
| Date: | 2005–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:591&r=env |
| By: | Francisco Álvarez (Universidad Complutense de Madrid); Gustavo A. Marrero (Universidad Complutense de Madrid); Luis Puch (Universidad Complutense de Madrid. Facultad de CC. Económicas y Empresariales. Dpto. Economía Cuantitativa.) |
| Abstract: | This paper analyses the role of macroeconomic performance in shaping the evolution of air pollutants in a panel of European countries from 1990 to 2000. The analysis is addressed in connection with EU environmental regulation and taking into account macroeconomic performance. We start by documenting the patterns of crosscountry differences among different pollutants. We then interpret these differences within a neoclassical growth model with pollution. Three main pieces of evidence are presented. First, we analyze the existence of convergence of pollution levels within European economies. Second, we rank countries according to its performance in terms of emissions and growth. Third, we evaluate the evolution of emissions in terms of the targets signed for 2010. |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:0406&r=env |
| By: | Hua Wang (World Bank); Craig Meisner (World Bank); Benoît Laplante |
| Abstract: | Laplante, Meisner, and Wang present a study of willingness-to-pay of the Armenian Diaspora in the United States to protect Armenia’s Lake Sevan, a unique and precious symbol of the Armenian cultural heritage. Dichotomous choice contingent valuation questions were asked in mail surveys to elicit respondents’ willingness to pay for the protection of Lake Sevan. The results show that on average, each household of the Armenian Diaspora in the United States would be willing to provide a one-time donation of approximately US$80 to prevent a further degradation of Lake Sevan, and approximately US$280 to restore the quality of the lake by increasing its water level by three meters. This paper—a product of the Infrastructure and Environment Team, Development Research Group—is part of a larger effort in the group to understand environmental economics. |
| Keywords: | Environment; Globalization |
| Date: | 2005–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3520&r=env |