From firm to global-level pollution control: The case of transboundary pollution

Raouf Boucekkine (), Giorgio Fabbri, S. Federico and Fausto Gozzi

Working Papers from Grenoble Applied Economics Laboratory (GAEL)

Abstract: We study the joint determination of optimal investment and optimal depollution in a spatiotemporal framework where pollution is transboundary. Pollution is controlled at a global level. The regulator internalizes that: (i) production generates pollution, which is bad for the wellbeing of population, and that (ii) pollution flows across space driven by a diffusion process. We solve analytically for the optimal investment and depollution spatiotemporal paths and characterize the optimal long-term spatial distribution when relevant. We finally explore numerically the variety of optimal spatial distributions obtained using a core/periphery model where the core differs from the periphery either in terms of input productivity, depollution efficiency, environmental awareness or self-cleaning capacity of nature. We also compare the distributions with and without diffusion. Key aspects in the optimal policy of the regulator are the role of aversion to inequality, notably leading to smoothing consumption across locations, and the control of diffusive pollution adding another smoothing engine.

Keywords: DECISION ANALISIS; POLLUTION CONTROL; GEOGRAPHY; TRANSBOUNDARY POLLUTION; INFINITE DIMENSIONAL OPTIMAL CONTROL PROBLEMS (search for similar items in EconPapers)
JEL-codes: C61 E60 Q52 Q53 R12 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ene and nep-env
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Related works:
Journal Article: From firm to global-level pollution control: The case of transboundary pollution (2021)
Working Paper: From firm to global-level pollution control: The case of transboundary pollution (2021)
Working Paper: From firm to global-level pollution control: the case of transboundary pollution (2021)
Working Paper: From Firm to Global-Level Pollution Control: the Case of Transboundary Pollution (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:gbl:wpaper:2020-08

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