EconPapers    
Economics at your fingertips  
 

Think locally, act locally: Can decentralized planning really achieve first-best in the presence of environmental spillovers?

Harrison Fell () and Daniel Kaffine

No 2013-07, Working Papers from Colorado School of Mines, Division of Economics and Business

Abstract: Strikingly, Ogawa and Wildasin (2009) find that in a model with heterogenous jurisdictions, interjurisdictional capital flows, and interjurisdictional environmental damage spillovers, decentralized planning outcomes are equivalent to that under a single centralized planner. Taken to its extreme this result renders international agreements such as the Kyoto Protocol irrelevant. We first show the critical importance of two key assumptions (no retirement of capital, fixed environmental damages per unit of capital) in obtaining this result. Second, we consider a more general model allowing for capital retirement and abatement activities and show that generally the outcome of a decentralized market differs from the solution of a centralized planner's social welfare-maximizing problem.

Pages: 18 pages
Date: 2013-08
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://econbus-papers.mines.edu/working-papers/wp201307.pdf First version, 2013 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mns:wpaper:wp201307

Access Statistics for this paper

More papers in Working Papers from Colorado School of Mines, Division of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Jared Carbone ().

 
Page updated 2021-12-18
Handle: RePEc:mns:wpaper:wp201307