Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/27532
Authors: 
Winkler, Ralph
Year of Publication: 
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
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: 
Creative Commons License: 
http://creativecommons.org/licenses/by-nc/2.0/de/deed.en
Document Type: 
Article

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