A spatiotemporal framework for the analytical study of optimal growth under transboundary pollution

Raouf Boucekkine (), Giorgio Fabbri, Salvatore Federico () and Fausto Gozzi
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Salvatore Federico: DEPS - Dipartimento di Economia Politica e Statistica - UNISI - Università degli Studi di Siena = University of Siena

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Abstract: We construct a spatiotemporal frame for the study of optimal growth under transboundary pollution. Space is continuous and polluting emissions originate in the intensity of use of the production input. Pollution flows across locations following a diffusion process. The objective functional of the economy is to set the optimal production policy over time and space to maximize welfare from consumption, taking into account a negative local pollution externality and the diffusive nature of pollution. Our framework allows for space and time dependent preferences and productivity, and does not restrict diffusion speed to be space-independent. This provides a comprehensive setting to analyze pollution diffusion with a close account of geographic heterogeneity. The involved optimization problem is infinite-dimensional. We propose an alternative method for an analytical characterization of the optimal paths and the asymptotic spatial distributions. The method builds on a deep economic concept of pollution spatiotemporal welfare effect, which makes it definitely useful for economic analysis.

Keywords: infinite dimensional optimal control; optimal growth; spatiotemporal modelling; transboundary pollution (search for similar items in EconPapers)
Date: 2019-10-04
New Economics Papers: this item is included in nep-ene and nep-env
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Working Paper: A spatiotemporal framework for the analytical study of optimal growth under transboundary pollution (2019)
Working Paper: A spatiotemporal framework for the analytical study of optimal growth under transboundary pollution (2019)
Working Paper: A Spatiotemporal Framework for the Analytical Study of Optimal Growth Under Transboundary Pollution (2019)
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