Tradable pollution permits in dynamic general equilibrium: can optimality and acceptability be reconciled?

Bréchet, Thierry;Jouvet, Pierre-André;Rotillon, Gilles
(2010)

Files

coredp2010_56web.pdf
  • Open Access
  • Adobe PDF
  • 596.56 KB
Download

Details

Authors
  • Bréchet, ThierryUCLouvain
    Author
  • Jouvet, Pierre-AndréUniversité Paris Ouest, Nanterre - La Défense
    Author
  • Rotillon, GillesUniversité Paris Ouest, Nanterre - La Défense
    Author
Abstract
In this paper we study the optimal growth path and its decentralization in a two-sector overlapping-generations model with pollution. One sector (power generation) is polluting and the other (final good) is not. Pollution is regulated by tradable emission permits. The issue is whether the optimal growth path can be replicated in equilibrium with pollution permits, given that some permits must be issued free of charge for the sake of political acceptability. We provide a policy rule that allows optimality and acceptability to be reconciled.
Affiliations

Citations

  • APA
  • Chicago
  • FWB

Bréchet, T., Jouvet, P.-A., & Rotillon, G. (2010). Tradable pollution permits in dynamic general equilibrium: can optimality and acceptability be reconciled? (CORE Discussion Paper 2010/56). https://hdl.handle.net/2078.5/79004