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Optimal Pollution Taxation and Abatement When Leisure and Environmental Quality are Complements

Heijdra, Ben ; Heijnen, Pim ; Kindermann, Fabian



Zusammenfassung

We study optimal environmental policy in a world featuring multiple stable economic-ecological equilibria. There is a two-way interaction between the macro-economy and the environment. We assume that the society under consideration finds itself in a high pollution equilibrium and show that a benevolent social planner is in principle able to engineer substantial welfare gains by choosing the ...

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