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Title:Now or Never: Environmental Protection under Hyperbolic Discounting PDF Logo
Authors:Winkler, Ralph
Issue Date:2009
Citation:[Journal:] Economics: The Open-Access, Open-Assessment E-Journal [Volume:] 3 [Issue:] 2009-12 [Pages:] 1-22 [DOI/URN:] doi:10.5018/economics-ejournal.ja.2009-12
Series/Report no.:economics - The Open-Access, Open-Assessment E-Journal 2009-12
Abstract:The author analyzes the optimal investment in environmental protection in a model of non-overlapping hyperbolically discounting agents. He shows that, in the long run and in the absence of a commitment device, society is stuck in a situation where all agents prefer further investments, yet no agent invests. This holds no matter whether agents are aware of the time inconsistency of their preferences. As a consequence, awareness of the time-inconsistency problem poses at best a short run remedy. Moreover, such an outcome may be Pareto inefficient and may explain the weak performance of long-run environmental policies.
Subjects:Environmental policy
environmental protection
hyperbolic discounting
Markov perfect equilibria
time-inconsistency
JEL:D90
Q50
Q58
Persistent Identifier of the first edition:doi:10.5018/economics-ejournal.ja.2009-12
URL of the first edition:http://www.economics-ejournal.org/economics/journalarticles/2009-12
Creative Commons License:http://creativecommons.org/licenses/by-nc/2.0/de/deed.en
Document Type:Article
Appears in Collections:Economics: The Open-Access, Open-Assessment E-Journal - Journal Articles

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