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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Environmental policy instruments;Dynamic Model;Elasticity of substitution
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities ; Redistributive Effects ; Environmental Taxes and Subsidies; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy

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