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dc.contributor.authorPommeret, Audeen_US
dc.contributor.authorPrieur, Fabienen_US
dc.date.accessioned2011-01-31en_US
dc.date.accessioned2011-12-15T11:33:59Z-
dc.date.available2011-12-15T11:33:59Z-
dc.date.issued2009en_US
dc.identifier.urihttp://hdl.handle.net/10419/53364-
dc.description.abstractThe design of environmental policy typically takes place within a framework in which uncertainty over the future impact of pollution and two different kinds of irreversibilities interact. The first kind of irreversibility concerns the sunk cost of environmental degradation; the second is related to the sunk cost of environmental policy. Clearly, the two irreversibilities pull in opposite directions: policy irreversibility leads to more pollution and a less/later policy while environmental irreversibility generates less pollution and a more/sooner policy. Using a real option approach and an infinite time horizon model, this paper considers both irreversibilities simultaneously. The model first is developed by paying particular attention to the option values related to pollution and policy adoption. Solving the model in closed form then provides solutions for both the optimal pollution level and the optimal environmental policy timing. Finally, the model is calibrated with the purpose of appraising which irreversibility has the prevailing effect and what is the overall impact of both irreversibilities on pollution and policy design.en_US
dc.language.isoengen_US
dc.publisherFondazione Eni Enrico Mattei (FEEM) Milanoen_US
dc.relation.ispartofseriesNota di lavoro // Fondazione Eni Enrico Mattei: Sustainable development 10.2009en_US
dc.subject.jelQ58en_US
dc.subject.jelD81en_US
dc.subject.ddc330en_US
dc.subject.keywordEnvironmental Policyen_US
dc.subject.keywordEnvironmental Irreversibilityen_US
dc.subject.keywordPolicy Irreversibilityen_US
dc.titleDouble irreversibility and environmental policy designen_US
dc.typeWorking Paperen_US
dc.identifier.ppn644905174en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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