In this assignment researches built up a model of the mutual definition of the level of economy’s advancement and improvement through business sector collaborations and the degree of pollution regulation through corporate intention of making decisions.
The key point in this brief literature review is to resolve a concern whether societies care about pollution or does it continue to grow boundlessly as revenue increases? The aim is to show the interaction between income and environmental degradation and present an understandable theoretical model of political and economic process to set up environmental policy for pollution to be controlled. The paper is divided into 7 sections, a concise summary of each will be explained below.
The part two which is called “The basic model with pollution taxes” lays out the basic model, learns equilibrium where humans vote over pollution taxes and describes that by modeling and economy to have an accessible wide range of productive techniques that alter according to both their costs as well as environmental effects, the authors adopt the simplifying assumption that the government burdens specific taxes with a goal to control pollution. The model is used with two period lived overlapping generations. The nature of pollution to be modeled is shown in both physical and temporal dimensions.
In section three more entirely is represented the dynamic behavior of such equilibrium. Moreover, the authors analyzed variables selected by Grossman and Krueger which are applied by his model. Firstly, we should take into consideration the dependency the growth rate of the total basic capital on rate of tax. Secondly, the assumptions are based on the thesis that criteria governing the growth rate of capital imply that on equilibrium path the stock of basic capital is going up and converges to infinity.
Chapter 4 studies the case where individuals vote over minimum quality or environmental standards and informs us about regularity quality choice. The authors propose the statement that quantitative limitations can be used as an effective and alternative method to enforce environmental standard by supporting this idea with an example of the United Stated which has a quantitative restriction on the number of leaded gasoline brining car engines that can be sold: it equals 0. However, this type of limitations is typical in a lot of environmental regulations.
Passage five examines a class of optimal allocations. Researchers in this literature review raise questions if electors are too shortsighted to since they disregard the influence of pollution on other humans and a concern about equilibrium levels of pollutions contrast to optimal levels of pollutions. Though it is well known that in overlapping generation m models it is challenging to entirely demonstrate the class of optimal allocations, nevertheless, in order to get an idea of the nature of optimal pollution paths authors incorporate simple social preference function.
The part 6 suggests several possible extensions of the model that are straightforward and do not differ the qualitative properties of the outcome. From the modifications, authors highlight global external effect; pollution as a stock variable; heterogeneity; the uses of tax income and taking into account some alternative technologies.
Bibliography
Jones,L. and Manuelli,R.(1995). A Positive Model of Growth and Pollution Controls.
