Optimal Growth with Polluting Waste and Recycling

Raouf Boucekkine () and Fouad El Ouardighi ()
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Fouad El Ouardighi: ESSEC Business School

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Abstract: We study an optimal AK-like model of capital accumulation and growth in the presence of a negative environmental externality in the tradition of Stokey (1998). Both production and consumption activities generate polluting waste. The economy exerts a recycling effort to reduce the stock of waste. Recycling also generates income, which is fully devoted to capital accumulation. The whole problem amounts to choosing the optimal control paths for consumption and recycling to maximize a social welfare function that notably includes the waste stock and disutility from the recycling effort. We provide a mathematical analysis of both the asymptotic behavior of the optimal trajectories and the shape of transition dynamics. Numerical exercises are performed to illustrate the analysis and to highlight some of the economic implications of the model.

Keywords: sustainability; recycling; capital accumulation; waste (search for similar items in EconPapers)
Date: 2015-03
New Economics Papers: this item is included in nep-env, nep-ger, nep-gro and nep-res
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01126636
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Related works:
Chapter: Optimal Growth with Polluting Waste and Recycling (2016)
Working Paper: Optimal Growth with Polluting Waste and Recycling (2016)
Working Paper: Optimal Growth with Polluting Waste and Recycling (2015)
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