Optimal economic growth and energy policy: analysis of nonrenewable and renewable energy

Tomoyuki Sakamoto and Shunsuke Managi

Environmental Economics and Policy Studies, 2016, vol. 18, issue 1, 19 pages

Abstract: This article analyzes the taxes levied on the nonrenewable energy sector and the subsidies awarded for renewable energy use. Applyin g the decentralized economy model with a parallel use of two types of energy, we find that the decentralized economy cannot attain the social optimum due to externality in the market economy. Using optimal tax to attain the social optimum in the decentralized economy entails imposing it on the nonrenewable energy sector. Using damage functions for simulation in our model, we find that the worse the environmental damage is, the larger the cost. Copyright Society for Environmental Economics and Policy Studies and Springer Japan 2016

Keywords: Optimal growth model; Nonrenewable and renewable energy; Tax and subsidy; Q20; Q30; Q42; Q43 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s10018-015-0108-3

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