Tradable pollution permits in dynamic general equilibrium: can optimality and acceptability be reconciled?

Thierry Bréchet, Pierre-André Jouvet and Gilles Rotillon
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Gilles Rotillon: EconomiX, Université de Paris Ouest, Nanterre – La Défense, France

No 2010056, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In this paper we study the optimal growth path and its decentralization in a two-sector overlapping- generations model with pollution. One sector (power generation) is polluting and the other (final good) is not. Pollution is regulated by tradable emission permits. The issue is whether the optimal growth path can be replicated in equilibrium with pollution permits, given that some permits must be issued free of charge for the sake of political acceptability. We provide a policy rule that allows optimality and acceptability to be reconciled.

Keywords: general equilibrium; optimal growth; pollution; tradable emission permits; acceptability (search for similar items in EconPapers)
JEL-codes: D61 D9 Q28 (search for similar items in EconPapers)
Date: 2010-10-01
New Economics Papers: this item is included in nep-dge, nep-ene and nep-env
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https://sites.uclouvain.be/core/publications/coredp/coredp2010.html (application/pdf)

Related works:
Journal Article: Tradable pollution permits in dynamic general equilibrium: Can optimality and acceptability be reconciled? (2013)
Working Paper: Tradable pollution permits in dynamic general equilibrium: can optimality and acceptability be reconciled? (2013)
Working Paper: Tradable pollution permits in dynamic general equilibrium: can optimality and acceptability be reconciled? (2013)
Working Paper: Tradable pollution permits in dynamic general equilibrium: can optimality and acceptability be reconciled? (2011)
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