Optimal dynamic scale and structure of a multi-pollution economy

Stefan Baumgärtner, Frank Jöst and Ralph Winkler
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Frank Jöst: Alfred-Weber-Institute of Economics, Universtity of Heidelberg

No 50, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: 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.

Keywords: dynamoic economy-environment interaction; multi-pollutant emissions; non-monotonic control; optimal scale; stock pollution; structural change; time scale (search for similar items in EconPapers)
JEL-codes: O10 O41 Q20 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2007-05
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Optimal dynamic scale and structure of a multi-pollution economy (2009)
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