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The environmental Kuznets curve in a world of irreversibility

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Abstract

This paper develops an overlapping generations model where consumption is the source of polluting emissions. Pollution stock accumulates with emissions but is partially assimilated by nature at each period. The assimilation capacity of nature is limited and vanishes beyond a critical level of pollution. We first show that multiple equilibria exist. More importantly, some exhibit irreversible pollution levels although an abatement activity is operative. Thus, the simple engagement of maintenance does not necessarily suffice to protect an economy against convergence toward a steady state having the properties of an ecological and economic poverty trap. In contrast with earlier related studies, the emergence of the environmental Kuznets curve is no longer the rule. Instead, we detect a sort of degenerated environmental Kuznets curve that corresponds to the equilibrium trajectory leading to the irreversible solution.

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Authors and Affiliations

  1. IREGE, University of Savoie and LAMETA, 4, chemin de Bellevue, 74944, Annecy-Le-Vieux, France

    Fabien Prieur

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  1. Fabien Prieur
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Correspondence to Fabien Prieur.

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I would like to thank Alain Venditti, Mabel Tidball, Alain Jean-Marie and Thierry Bréchet for their helpfull comments and suggestions. I am deeply grateful to an anonymous referee whose comments have greatly improved the paper.

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Prieur, F. The environmental Kuznets curve in a world of irreversibility. Econ Theory 40, 57–90 (2009). https://doi.org/10.1007/s00199-008-0351-y

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