Beyond additive preferences: Economic behavior and the income pollution path

Eugenio Figueroa () and Roberto Pasten

Resource and Energy Economics, 2015, vol. 41, issue C, 91-102

Abstract: Theoretical models of the environmental Kuznets curve (EKC) almost universally assume additive preferences; we demonstrate that under non-additive preferences the sufficient condition to sign the economy's income-pollution path depends on the elasticity of substitution between consumption and environment (and not on the elasticity of marginal utility of consumption). The proposed model provides behavioral content that has been missed in the existing literature. In the model, and also departing from the previous literature, preferences change and evolve (through a variable elasticity of substitution) according to the relative scarcity of the environment.

Keywords: Non-additive preferences; Relative scarcity of the environment; Relative correlation aversion; Environment Kuznets curve (search for similar items in EconPapers)
JEL-codes: C23 Q53 Q58 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:41:y:2015:i:c:p:91-102

DOI: 10.1016/j.reseneeco.2015.04.004

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