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Environmental policy in dynamic models: The impact of the elasticity of substitution if consumers pollute

Barthel, Jens (2005): Environmental policy in dynamic models: The impact of the elasticity of substitution if consumers pollute.

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Abstract

This paper discusses first results of a comparative study of different environmental policy instruments. In a model with pollution as a side effect of consumption different environmental policies are studied. In simulations we observe the dynamic behavior of models with utility functions of the Leontief, CES, and Cobb-Douglas type. Environmental policy is modeled as a consumption tax. Tax revenues are used to pay a subsidy for environment-friendly activities, are reimbursed as lump-sum payments or vanish. Furthermore we investigate the implications of errors in the choice of instruments.

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  • Environmental policy in dynamic models: The impact of the elasticity of substitution if consumers pollute. (deposited 11. Apr 2008 14:35) [Currently Displayed]
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