TY  - GEN
AB  - We present a basic exogenous growth model with two consumption goods that
differ as regards their contributions to environmental pollution. Allowing for habit
formation of the polluting good, we show under which conditions habit formation
raises the consumption of the clean good relative to the dirty one in the compet-
itive economy. Further, we demonstrate when habit formation generates a lower
steady-state pollution stock compared to the situation without habits. Finally, we
determine the Pigou tax rates and we illustrate that the social optimum may imply
a higher steady-state pollution than the competitive economy if the habit formation
is sufficiently strong.
DA  - 2016
DO  - 10.4119/unibi/2915589
KW  - environmental pollution
KW  - clean and dirty consumption
KW  - habits
KW  - optimal control
LA  - eng
PY  - 2016
SN  - 2196-2723
SP  - 26-
TI  - Optimal consumption of polluting and non-polluting goods: The role of habits
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-29155894
Y2  - 2024-11-22T02:33:51
ER  -