Environmental externalities and overlapping generations
(2010)
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- Authors
- Supervisors
- Bréchet, Thierry
- Abstract
- (en) This thesis embodies three essays, which intend to provide a comprehensive picture of the links between economic activity and the environment. In our framework the presence of environmental externalities makes the competitive ouctcome inefficient, so that the intervention of a social planner is required in order to restore Pareto efficiency. However, since such a benevolent planner does not exist in reality, it becomes interesting to study different and more realistic forms of governance. As for the analytical tool, an overlapping generations setting allows us to capture the intergenerational character of environmental externalities. In the first chapter the environment is worsened by consumption activity and positively affected by maintenance investment. Households derive utility from both consumption of physical goods and environmental quality. Due to the negative externalities that characterize the model, it is shown that the competitive equilibrium is inefficient. Three fiscal schemes set by a social planner to decentralize the social optimum are compared to those provided by a short-lived government that maximizes the welfare of the electors living during its term of office. In the second chapter we address the implications of population aging in a political-economic model with endogenous longevity and voting over two important determinants of human health: health care spending and environmental maintenance. As corroborated by empirical evidence, the relative support for these two public expenditures is not neutral to age, as environmental care has larger support among the young and vice versa. The outcome is then compared with the one resulting from a social planner approach where also future, unborn generations are taken into account. Several channels through which the two solutions differ are highlighted. In the third chapter the environment is thought of as a common pool resource. Property rights are assigned to local communities, which decide whether or not to cooperate. We study how the property rights regime influences the evolution of the resource through its effects on the natural growth rate and maintenance costs. The strategic and cooperative results are compared, and a fiscal policy able to decentralize the cooperative outcome is studied.
- Affiliations
Citations
Balestra, C. (2010). Environmental externalities and overlapping generations. https://hdl.handle.net/2078.5/65540