Limit Cycles Under a Negative Effect of Pollution on Consumption Demand: The Role of an Environmental Kuznets Curve

Stefano Bosi () and David Desmarchelier
Additional contact information
Stefano Bosi: University of Evry

Environmental & Resource Economics, 2018, vol. 69, issue 2, No 6, 343-363

Abstract: Abstract Since Heal (Explorations in natural resource economics. The Johns Hopkins University Press for Resources for the Future, Baltimore, 1982), there is a theoretical consensus about the occurrence of limit cycles (through a Hopf bifurcation) under a positive effect of pollution on consumption demand (compensation effect) and about the impossibility under a negative effect (distaste effect). However, recent empirical evidence advocates for the relevance of distaste effects. Our paper challenges the conventional view on the theoretical ground and reconciles theory and evidence. The environmental Kuznets curve (EKC) (pollution first increases in the capital level then decreases) plays the main role. Indeed, the standard case à la Heal (limit cycles only under a compensation effect) only works along the upward-sloping branch of the curve while the opposite (limit cycles only under a distaste effect) holds along the downward-sloping branch. Welfare effects of taxation also change according to the slope of the EKC.

Keywords: Pollution; Environmental Kuznets curve; Hopf bifurcation; Ramsey model (search for similar items in EconPapers)
JEL-codes: E32 O44 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://link.springer.com/10.1007/s10640-016-0082-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Limit Cycles Under a Negative Effect of Pollution on Consumption Demand: The Role of an Environmental Kuznets Curve (2018)
Working Paper: Limit Cycles under a Negative Effect of Pollution on Consumption Demand: The Role of an Environmental Kuznets Curve (2015)
Working Paper: Limit cycles under a negative effect of pollution on consumption demand: the role of an environmental Kuznets curve (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:enreec:v:69:y:2018:i:2:d:10.1007_s10640-016-0082-7

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

DOI: 10.1007/s10640-016-0082-7

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().