Optimal Policy with R&D-based Growth and the Risk of Environmental Disaster

Palokangas, T. (2023). Optimal Policy with R&D-based Growth and the Risk of Environmental Disaster. Helsinki GSE Discussion Papers , Helsinki, Finland.

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The extraction of carbon energy contributes to the global stock of pollution, increasing the risk of welfare-damaging environmental disaster. The governments of the countries educate workers as scientists. Oligopolists produce goods by workers and carbon energy. R&D Firms improve effciency by scientists to supplant incumbent oligopolists through competition, which generates economic growth. In this setup, an international central planner can decentralize the social optimum by setting a precautionary tax on emissions before the occurrence of the disaster. That tax hampers pollution, but speeds up economic growth. The socially optimal level of the tax is derived.

Item Type: Other
Uncontrolled Keywords: emissions, pollution, R&D, endogenous growth, environmental disaster, precautionary policy
Research Programs: Advancing Systems Analysis (ASA)
Advancing Systems Analysis (ASA) > Systemic Risk and Resilience (SYRR)
Depositing User: Luke Kirwan
Date Deposited: 27 Nov 2023 08:16
Last Modified: 27 Nov 2023 08:16
URI: https://pure.iiasa.ac.at/19208

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