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Optimality of irreversible pollution accumulationTahvonen, O.; Withagen, C.A.A.M. Published in: Journal of Economic Dynamics and Control Publication date: 1996Link to publication Citation for published version (APA): Tahvonen, O., & Withagen, C. A. A. M. (1996). Optimality of irreversible pollution accumulation. Journal of Economic Dynamics and Control, 20(9-10), 1775-1797. General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.-Users may download and print one copy of any publication from the public portal for the purpose of private study or research -You may not further distribute the material or use it for any profit-making activity or commercial gain -You may freely distribute the URL identifying the publication in the public portal Take down policyIf you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. AbstractThis paper considers optimal pollution accumulation when the decay function has an inverted-U shape. Such decay functions have empirical relevance but they lead to nonconvexities in dynamic optimization. The nonconvexity problem is handled here by applying a two-stage optimization procedure. The analysis shows that two qualitatively different optimality candidates may exist simultaneously.We identify cases where the choice can be made on a priori grounds and cases where it requires computation of the present values of both optimality candidates. An optimal emission trajectory leading to irreversible pollution is typically nonmonotonic.

Pollution is an inevitable by-product of production and is only gradually dissolved by the environment. It can be reduced by producing less and by cleaning up the environment, but neither occur when they are left to the market. Cleaning activities and the optimal emission charges increase with the stock of pollutants. When one allows for pollution of the environment in the classical Ramsey problem, the capital stock is less than in the market outcome and a fortiori less than under the golden rule. The analysis distinguishes between stock and flow externalities arising from pollution. An increase in impatience can lead to more capital accumulation, even though this leaves less room for current consumption. Copyright Kluwer Academic Publishers 1991Pollution control, abatement activities, capital accumulation, Ramsey model,

General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.-Users may download and print one copy of any publication from the public portal for the purpose of private study or research -You may not further distribute the material or use it for any profit-making activity or commercial gain -You may freely distribute the URL identifying the publication in the public portal Take down policy If you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. AbstractDue to developments on the oil market in the 1970s, the theory of exhaustible resources was extended with the cartel-versus-fringe model to characterize markets with one big coherent cartel and a large number of small suppliers called the fringe. Because cartel and fringe are leader and follower, the von Stackelberg solution concept is appropriate for the supply side of this market. The solution for the cartel-versus-fringe model, presented in the previous literature, proved to be time-inconsistent for a large plausible range of values for extraction costs and initial reserves. This paper provides a (strongly) time-consistent solution for the cartel-versus-fringe model. ?