Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/49491
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dc.contributor.authorPrieur, Fabienen_US
dc.contributor.authorTidball, Mabelen_US
dc.contributor.authorWithagen, Cees A.en_US
dc.date.accessioned2011-07-22en_US
dc.date.accessioned2011-09-14T13:12:50Z-
dc.date.available2011-09-14T13:12:50Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/49491-
dc.description.abstractThis paper extends the classical exhaustible-resource/stock-pollution model with the irreversibility of pollution decay. Within this framework, we answer the question how the potential irreversibility of pollution affects the extraction path. We investigate the conditions under which the economy will optimally adopt a reversible policy, and when it is optimal to enter the irreversible region. In the case of irreversibility it may be optimal to leave a positive amount of resource in the ground forever. As far the optimal extraction/emission policy is concerned, several types of solutions may arise, including solutions where the economy stays at the threshold for a while. Given that different programs may satisfy the first order conditions for optimality, we further investigate when each of these is optimal. The analysis is illustrated by means of a numerical example. To sum up, for any pollution level, we can identify a critical resource stock such that there exist multiple optima i.e. a reversible and an irreversible policy that yield exactly the same present value. For any resource stock below this critical value, the optimal policy is reversible whereas with large enough resource, irreversible policies outperform reversible programs. Finally, the comparison between irreversible policies reveals that it is never optimal for the economy to stay at the threshold for a while before entering the irreversible region.en_US
dc.language.isoengen_US
dc.publisher|aCenter for Economic Studies and Ifo Institute (CESifo) |cMunichen_US
dc.relation.ispartofseries|aCESifo working paper: Industrial Organisation |x3512en_US
dc.subject.jelQ30en_US
dc.subject.jelQ53en_US
dc.subject.jelC61en_US
dc.subject.ddc330en_US
dc.subject.keywordnon-renewable resourceen_US
dc.subject.keywordirreversible pollutionen_US
dc.subject.keywordoptimal policyen_US
dc.subject.stwRohstoffpolitiken_US
dc.subject.stwUmweltpolitiken_US
dc.subject.stwErschöpfbare Ressourcenen_US
dc.subject.stwRessourcenökonomiken_US
dc.subject.stwUmweltökonomiken_US
dc.subject.stwUmweltbelastungen_US
dc.subject.stwRohstoffressourcenen_US
dc.subject.stwTheorieen_US
dc.titleOptimal emission-extraction policy in a world of scarcity and irreversibilityen_US
dc.typeWorking Paperen_US
dc.identifier.ppn664389422en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US

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