Optimal dynamic scale and structure of a multi-pollution economy
Research output: Working paper › Working papers
Authors
We analyze the optimal dynamic scale and structure of a two-sector-economy, where each sector produces one consumption good and ons specific pollutant. Both pollutants accumulate at different 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 acticity may be less than maximal; (ii) the time sclae economic dynamics (change of scale and structure) is mainly determined by the lifetime of pollutNTS, 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.
Original language | English |
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Place of Publication | Lüneburg |
Publisher | Institut für Volkswirtschaftslehre der Universität Lüneburg |
Number of pages | 34 |
Publication status | Published - 2007 |
- Sustainability sciences, Management & Economics - dynamic economy-environment interaction, multi-pollutant emissions, non-monotonic control, optimal scale, Stock pollution, structural change, time scale