Environmental Sustainability with a Pollution Tax

Ramon Lopez and Sang Yoon

No 166244, Working Papers from University of Maryland, Department of Agricultural and Resource Economics

Abstract: This paper examines environmentally sustainable growth with reference to climate change assuming two final outputs and two factors of production, accounting for both pollution flow and stock effects. If the elasticity of marginal utility of consumption is greater than one, an optimal pollution tax ensures sustainable growth without any further government intervention. Otherwise, either a high temporal elasticity of substitution in production or consumption is required for sustainability. Even a suboptimal pollution tax may allow sustainable development provided the tax time profile meets certain conditions that are developed and described in this paper.

Keywords: Community/Rural/Urban Development; Environmental Economics and Policy (search for similar items in EconPapers)
Pages: 53
Date: 2014-04
New Economics Papers: this item is included in nep-ene, nep-env, nep-pbe and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:ags:umdrwp:166244

DOI: 10.22004/ag.econ.166244

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