Is Pollution a Giffen Good? General-Equilibrium Analysis and Some Policy Implications
Is Pollution a Giffen Good? General-Equilibrium Analysis and Some Policy Implications

Summary/Abstract: This paper takes a simple model with pollution and environmental quality and derives some novel results. In particular, pollution is shown to be a Giffen good. This is a very important finding with clear policy implications, namely that carbon taxes (and pollution permits) are counter-productive, as they lead to increase in pollution, and instead governments should administratively set emission caps.

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