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Strategic interactions and heterogeneity in a overlapping generations model with negative environmental externalities

Antoci, Angelo and Naimzada, Ahmad and Sodini, Mauro (2009): Strategic interactions and heterogeneity in a overlapping generations model with negative environmental externalities.

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Abstract

We analyze an overlapping generations model where individuals’ welfare depends on the stock of a free access environmental good E and on the consumption C of a private good. We assume that the production process of the private good depletes the natural resource but that specific investments alleviate these damages. In such context, we show that strategic behaviour and heterogeneity in preferences may be a source of complex dynamics.

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