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Optimal economic growth and energy policy: analysis of nonrenewable and renewable energy

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  • Tomoyuki Sakamoto
  • Shunsuke Managi

Abstract

This article analyzes the taxes levied on the nonrenewable energy sector and the subsidies awarded for renewable energy use. Applyin g the decentralized economy model with a parallel use of two types of energy, we find that the decentralized economy cannot attain the social optimum due to externality in the market economy. Using optimal tax to attain the social optimum in the decentralized economy entails imposing it on the nonrenewable energy sector. Using damage functions for simulation in our model, we find that the worse the environmental damage is, the larger the cost. Copyright Society for Environmental Economics and Policy Studies and Springer Japan 2016

Suggested Citation

  • Tomoyuki Sakamoto & Shunsuke Managi, 2016. "Optimal economic growth and energy policy: analysis of nonrenewable and renewable energy," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(1), pages 1-19, January.
    • Handle: RePEc:spr:envpol:v:18:y:2016:i:1:p:1-19
    DOI: 10.1007/s10018-015-0108-3
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    Cited by:

    1. Amedeo Argentiero, Tarek Atalla, Simona Bigerna, Silvia Micheli, and Paolo Polinori, 2017. "Comparing Renewable Energy Policies in EU-15, U.S. and China: A Bayesian DSGE Model," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
    2. Saida Daly & Mohamed Abdouli, 2023. "The Nexus between Environmental Quality, Economic Growth, and Trade Openness in Saudi Arabia (1990-2017)," International Journal of Energy Economics and Policy, Econjournals, vol. 13(4), pages 579-598, July.
    3. Koji Kotani & Makoto Kakinaka, 2017. "Some implications of environmental regulation on social welfare under learning-by-doing of eco-products," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 121-149, January.

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    More about this item

    Keywords

    Optimal growth model; Nonrenewable and renewable energy; Tax and subsidy; Q20; Q30; Q42; Q43;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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