Non-Catastrophic Endogenous Growth with Pollution and Abatement

J.Aznar-Márquez () and José Ruiz-Tamarit
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J.Aznar-Márquez: Univ.Miguel Hernández d'Elx, http://www.umh.es/

No E2004/80, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: When there are pollution externalities the competitive equilibrium is not Pareto-optimal nor environmentally sustainable even if abatement activities are endogenously decided. In this paper we introduce the possibility of an ecological catastrophe like the one predicted by the global climate change, imposing the constraint of an upper-limit to the pollutants stock. We characterize the socially optimal solution and study conditions for the sustainability of the balanced growth path. We find a trade-off between environmental quality and growth. The rate of growth depends negatively on the weight of environmental care in the utility function and positively on the population growth rate. We show that the emissions reduction recommended in the Kioto protocol is an appropriate policy to avoid the ecological catastrophe and ensure global efficiency and positive long-run growth.

Keywords: Environment; Externalities; Optimal Growth; Ecological Catastrophe; Sustainability. (search for similar items in EconPapers)
JEL-codes: C61 C62 O41 Q5 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2004
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Non Catastrophic Endogenous Growth with Pollution and Abatment (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:cea:doctra:e2004_80

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