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Environmental depletion, defensive consumption and negative externalities

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  • Alessandro Fiori Maccioni

    (University of Sassari)

Abstract

This paper analyses economic dynamics in a context in which the production and consumption choices of economic agents generate environmental degradation. Agents can defend themselves from environmental degradation by increasing the production and consumption of output, which is assumed to be a (perfect) substitute for environmental quality. We consider the cases in which agents can coordinate their actions or not, and we show that if the dynamics is conditioned by negative externalities (so that there is no coordination), then a self-reinforcing mechanism may occur leading to production and consumption levels higher than the socially optimal ones. A complete analysis of the dynamics and of the welfare properties of the stationary states is provided.

Suggested Citation

  • Alessandro Fiori Maccioni, 2018. "Environmental depletion, defensive consumption and negative externalities," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 41(2), pages 203-218, November.
    • Handle: RePEc:spr:decfin:v:41:y:2018:i:2:d:10.1007_s10203-018-0226-z
    DOI: 10.1007/s10203-018-0226-z
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    1. Mikhail Anufriev & Davide Radi & Fabio Tramontana, 2018. "Some reflections on past and future of nonlinear dynamics in economics and finance," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 41(2), pages 91-118, November.

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    More about this item

    Keywords

    Defensive consumption; Negative externalities; Environmental goods; Self-protection; Altruism;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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