The consequences of a one-sided externality in a dynamic, two-agent framework

Müller–Fürstenberger, Georg; Schumacher, Ingmar

doi:10.1016/j.ejor.2016.07.045

Cited by 5 publications

(4 citation statements)

References 14 publications

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“…Global linkages play a crucial role here. Müller-Fürstenberger and Schumacher ( 2017 ) point to another issue, namely the consequences of capital mobility. Although these publications do not specifically address environmental issues there are obvious lessons to learn for environmental economists.…”

Section: Globalization and Cooperationmentioning

confidence: 99%

Suggestions for a Covid-19 Post-Pandemic Research Agenda in Environmental Economics

Elliott

Schumacher

Withagen

2020

Environ Resource Econ

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In this article we draw upon early lessons from the 2020 Covid-19 crisis and discuss how these may relate to a future research agenda in environmental economics. In particular, we describe how the events surrounding the Covid-19 crisis may inform environmental research related to globalization and cooperation, the green transition, pricing carbon externalities, as well as the role of uncertainty and timing of policy inventions. We also discuss the implications for future empirical research in this area.

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Section: Globalization and Cooperationmentioning

confidence: 99%

Suggestions for a Covid-19 Post-Pandemic Research Agenda in Environmental Economics

Elliott

Schumacher

Withagen

2020

Environ Resource Econ

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“…Especially, we study in details the effect of debt transfers when one country makes no effort to reduce its net emissions. Third, Muller-Furstenberger and Schumacher (2017) propose a dynamic model where all agents contribute to a global externality, but only those in a specific region suffer from it.…”

Section: Countriesmentioning

confidence: 99%

“…This last point is all the more important as the environment is already highly polluted. A high level of pollution compromises a favorable evolution of the environment, as shown by the case of plastics in the oceans and the loss of marine biodiversity it induces, or the consequences of climate change on biodiversity; nature cannot restore the natural state, unless huge investments are undertaken (Muller‐Furstenberger & Schumacher, 2017).…”

Section: The Modelmentioning

confidence: 99%

“…While in this work mitigation efforts are exogenous, we differ by studying in detail the effect of debt transfers. Third, Muller‐Furstenberger and Schumacher (2017) propose a dynamic model where all agents contribute to a global externality, but only those in a specific region suffer from it. They show that if agents suffering from the externality are low income, they may be stuck in an environmental poverty trap, but capital market integration helps to escape from the trap.…”

Section: Introductionmentioning

confidence: 99%

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Pollution in a globalized world: Are debt transfers among countries a solution?

Davin

Fodha

Seegmuller

2022

Int J of Economic Theory

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This article analyzes the impacts of debt relief on production and pollution. We develop a two-country overlapping generations model with environmental externalities, public debts and perfect mobility of assets. Pollutant emissions arise from production, but agents may invest in pollution mitigation. Could debt relief be an efficient tool to encourage less developed countries to engage in the fight against climate change? We consider a decrease of the debt of the poor country balanced by an increase of the richer country's debt. We show that debt relief makes it possible to engage poor countries in the process of pollution abatement. Capital, environmental quality and welfare can increase in both countries. This result relies on the environmental sensitivity and the discount factor in the poor country relative to the rich one: the greater they are the more beneficial the debt relief is.

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Buy Coal or Kick-Start Green Innovation? Energy Policies in an Open Economy

Ravetti

Theoduloz

Valacchi

2020

Environ Resource Econ

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This paper analyses two unilateral policies available to countries that want to rapidly curb carbon emissions in the global economy, but do not own any fossil fuel resources. If fossil fuel owners do not cooperate in CO 2 emission reduction efforts, the only strategy to reduce their fossil fuels' use is to exploit the interconnectedness of production given by international trade. We compare a Pigouvian approach, namely a subsidy for renewable energy prices, and a Coasian supply-side strategy, buying extractive rights over fossil fuel deposits abroad. Using a dynamic North-South trade model with endogenous innovation, we show how these policies, designed to prevent an environmental disaster, have different cost and welfare profiles. If fossil fuel deposits can be purchased at their market price, the supply-side policy achieves the highest welfare. If instead the fossil fuel owners require a full compensation for their income loss, subsidies for renewable energy inputs can result in higher welfare, but only if the resource-rich region has less advanced technologies for green energy production than the countries implementing the policy.

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The consequences of a one-sided externality in a dynamic, two-agent framework

Cited by 5 publications

References 14 publications

Suggestions for a Covid-19 Post-Pandemic Research Agenda in Environmental Economics

Suggestions for a Covid-19 Post-Pandemic Research Agenda in Environmental Economics

Pollution in a globalized world: Are debt transfers among countries a solution?

Buy Coal or Kick-Start Green Innovation? Energy Policies in an Open Economy

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