Emission policy in an economic union with Poisson technological change

Abstract

This study examines optimal emission policy in a union of countries. In each country, labor is used in either production or research and development (R&D) which increases the probability of the improvement of production technology. The production of goods in any country incurs emissions that are spread all over the union. A household's utility in any country depends positively on his personal consumption and negatively on total emissions in the union. This study constructs the Pareto-optimal emission taxes for the countries.Journal of Economic Literature: 041, H23, F15

Dynamic Games in the Economics and Management of Pollution

“…The Green Golden Rule is a path that maximizes long-run sustainable utility of consumption and environment. Palokangas [161] searches for the Green Golden Rule in a union of symmetric countries that wish to coordinate their emission policies. In each country, a social planner maximizes welfare that depends positively on the level of consumption and negatively on total emissions in the union.…”