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Positive Effect of Pollution Permits in a Variety Expansion Model with Social Status Preference

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  • Yoshihiro Hamaguchi

Abstract

This study examines the effect of pollution permits on economic growth and welfare using a research and development‐based model that measures social status by a person's wealth position in society. Under realistic parameter conditions, we find that a decrease in pollution permit levels leads to an increase in the economic growth rate and improves welfare in a high steady state via the marginal rate of substitution between wealth and consumption, which is influenced by the crowding out and resource reallocation effects. This channel depends on the presence of social status preference, and we refer to this as the substitution effect.

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  • Yoshihiro Hamaguchi, 2019. "Positive Effect of Pollution Permits in a Variety Expansion Model with Social Status Preference," Manchester School, University of Manchester, vol. 87(4), pages 591-606, July.
    • Handle: RePEc:bla:manchs:v:87:y:2019:i:4:p:591-606
    DOI: 10.1111/manc.12270
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    Cited by:

    1. Hamaguchi, Yoshihiro, 2020. "Dynamic analysis of bribery firms’ environmental tax evasion in an emissions trading market," Journal of Macroeconomics, Elsevier, vol. 63(C).
    2. Xiaoxiang Xu & Mingqiu Liao, 2022. "Prediction of China’s Economic Structural Changes under Carbon Emission Constraints: Based on the Linear Programming Input–Output (LP-IO) Model," Sustainability, MDPI, vol. 14(15), pages 1-13, July.
    3. Hamaguchi, Yoshihiro, 2021. "Does the trade of aviation emission permits lead to tourism-led growth and sustainable tourism?," Transport Policy, Elsevier, vol. 105(C), pages 181-192.
    4. Hamaguchi, Yoshihiro, 2023. "Environmental tax evasion as a determinant of the Porter and pollution haven hypotheses in a corrupt political system," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 610-633.
    5. Yoshihiro Hamaguchi, 2021. "Environmental policy and social status preference for education in an Uzawa–Lucas model," Bulletin of Economic Research, Wiley Blackwell, vol. 73(3), pages 456-468, July.
    6. Yoshihiro Hamaguchi, 2020. "Do pollution havens restrict tourism-led growth? Achieving sustainable tourism via a mix of environmental and tourism policies," Tourism Economics, , vol. 26(7), pages 1175-1196, November.

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