Environmental Concern and Rational Production, Consumption and Rehabilitation

Amnon Levy

Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia

Abstract: Utility from consumption might be spoiled by the degradation of the environment. The incorporation of a direct dependency of utility on the state of the environment through environmental concern and the incorporation of the effects of production pollution and rehabilitative investment on the environment into a lifetime utility maximization model imply that a minimal degree of impatience is necessary for an interior steady state to exist. This steady state is unique, approachable along a path with damped oscillations of consumption and rehabilitative investment, and characterized by a larger production than in the steady state without environmental concern.

Keywords: Consumption; environmental investment; golden rule (search for similar items in EconPapers)
JEL-codes: O12 Q56 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2008
New Economics Papers: this item is included in nep-agr, nep-dge and nep-env
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