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The Political Economy of Environmental Policy with Overlapping Generations

Karp, Larry and Rezai, Armon (2014) The Political Economy of Environmental Policy with Overlapping Generations. International Economic Review , 55 (3). pp. 711-733. ISSN 1468-2354

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Abstract

A two-sector OLG model illuminates the intergenerational effects of a tax that protects an environmental stock. A traded asset capitalizes the economic returns to future tax-induced environmental improvements, benefiting the current asset owners, the old generation. Absent a transfer, the tax harms the young generation by decreasing their real wage. Future generations benefit from the tax-induced improvement in environmental stock. The principal intergenerational conflict arising from the tax is between generations alive at the time society imposes the policy, not between generations alive at different times. A Pareto-improving tax can be implemented under various political economy settings. (authors' abstract)

Item Type: Article
Additional Information: To see the final version of this paper please visit the publisher's website. Access to the published version requires a subscription. This is the accepted version of the following article : Karp, Larry, Rezai, Armon. 2014. The Political Economy of Environmental Policy with Overlapping Generations. International Economic Review 55 (3): 711-733., which has been published in final form at http://eu.wiley.com/WileyCDA/.
Keywords: Open-access resource / two-sector overlapping generations / resource tax / generational conflict / environmental policy / dynamic bargaining / Markov perfection
Classification Codes: JEL E24, H23, Q20, Q52, Q54
Version of the Document: Accepted for Publication
Variance from Published Version: Typographical
Depositing User: ePub Administrator
Date Deposited: 17 Dec 2014 14:17
Last Modified: 22 Aug 2016 22:24
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/68032/
URI: http://epub.wu.ac.at/id/eprint/4422

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