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- Title
Positive Effect of Pollution Permits in a Variety Expansion Model with Social Status Preference.
- Authors
Hamaguchi, Yoshihiro
- 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.
- Subjects
SOCIAL status; POLLUTION; LICENSES; CONSUMER preferences; ECONOMIC development
- Publication
Manchester School (1463-6786), 2019, Vol 87, Issue 4, p591
- ISSN
1463-6786
- Publication type
Article
- DOI
10.1111/manc.12270