Optimal growth with pollution: how to use pollution permits?

Pierre-André Jouvet, Philippe Michel and Gilles Rotillon
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Gilles Rotillon: THEMA

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: We study optimal growth and its decentralization in an overlapping generations model. The decentralization of an optimal path needs some specific taxes in addition to lump-sum transfers if there are externalities. The introduction of market of permits allows neutralizing the external environmental effects. We shows that there is a unique management of permits such that the equilibrium coincides with the optimal path: all permits should be auctioned i.e. no permits to firms. This conclusion is in contradiction with the usual pratice of grandfathering

Keywords: Optimal growth; environment; market of permits (search for similar items in EconPapers)
JEL-codes: D61 D9 Q28 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2004-02
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Optimal growth with pollution: how to use pollution permits? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:wpsorb:v04012

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