Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities

Antoci, Angelo and Sodini, Mauro (2009): Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities.

Abstract

We analyze an overlapping generations model where agent’s welfare depends on three goods: leisure, environmental quality and consumption of a private good. We assume that the production process of the private good depletes the natural resource and that the consumption of the private good alleviates the damages due to environmental deterioration. In such context, we show that individuals’ reactions to environmental deterioration may lead to complex dynamics, in particular to the rise of periodic orbits and chaos.

• Item Type: MPRA Paper
• Language: English
• Keywords: Defensive environmental expenditures; overlapping generations models; indeterminacy; undesirable economic growth
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q26 - Recreational Aspects of Natural Resources; D - Microeconomics > D6 - Welfare Economics > D62 - Externalities; C - Mathematical and Quantitative Methods > C0 - General > C02 - Mathematical Methods; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q56 - Environment and Development ; Environment and Trade ; Sustainability ; Environmental Accounts and Accounting ; Environmental Equity ; Population Growth; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q20 - General

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