In contrast to the overlapping-generations model, it is allowable to discount the future utility in a dynasty model without the ethical difficulty related to intergenerational conflicts. Much precedent research uses R...In contrast to the overlapping-generations model, it is allowable to discount the future utility in a dynasty model without the ethical difficulty related to intergenerational conflicts. Much precedent research uses Ramsey-type optimal growth theory in order to estimate the social discount rate. However, one must note that almost all the formulations neglect the existence of negative intertemporal externalities. This problem is vital when one analyzes the global warming problem mainly caused by the excess concentration of carbon dioxide (CO<sub>2</sub>). This is because an adjoining effect of capital accumulation exists besides the improvement of product capacity, which is reflected in the rate of interest (or equivalently, the marginal productivity of capital). That is, one cannot neglect a negative externality to the future productivity that originates from the excess emissions of CO<sub>2</sub>. Accordingly, following the optimal growth theory, the effective social discount rate should be heightened by a proportional carbon tax to suppress future excess consumption/ emissions than in the case of the existing analyses, which exclude such an intertemporal external diseconomy.展开更多
The Ramsey rule is regarded as a convenient vehicle for estimating the social discount rate in general. Carbon pricing is treated as another theory of environmental economics. This study clarifies the theoretical rela...The Ramsey rule is regarded as a convenient vehicle for estimating the social discount rate in general. Carbon pricing is treated as another theory of environmental economics. This study clarifies the theoretical relationship between the Ramsey rule and optimal carbon price, which has been overlooked in the existing research. It succeeds in deriving the optimal carbon price from the modified Ramsey rule in stationary state. Since the Ramsey rule decides the dynamics of an economy and a stationary state is its destination, by using the optimization condition of individual who are assumed to live infinitesimally short life, we can solve the optimal carbon price at stationary state.展开更多
When considering emissions control problems associated with carbon dioxide (CO2), social planning over quite a long-term horizon is usually considered to be necessary because it takes much time for the full absorption...When considering emissions control problems associated with carbon dioxide (CO2), social planning over quite a long-term horizon is usually considered to be necessary because it takes much time for the full absorption of CO2 by oceans and forests. Sometimes the required time horizon even becomes infinite. Such a fact seems to impose patience beyond the limits of human cognition. However, this study proves that the first-best emissions scenario can be achieved only by local altruism, which is dubbed parentage. Parentage is defined as the action of applying zero social discount rate to its subsequent generation, and discounting the utility of generations thereafter infinitely. In this sense, the nearly first-best emissions scenario is feasible within the ordinal cognition and benevolence of human beings. This paper also examines the definition of egalitarian sustainability, in which the utility of every generation must be kept constant, and reveals that such a definition of sustainability possibly provokes the inefficient intergenerational allocation of CO2. This is because the vested interest of the predecessors is put much importance in the process of the planning. It is required more rigid sustainability concept, in which the utility of each generation is no less decreasing through time and at least strictly increasing locally, to achieve the efficient allocation of CO2. One will find that the intergenerational allocation by the local altruism satisfies this property.展开更多
文摘In contrast to the overlapping-generations model, it is allowable to discount the future utility in a dynasty model without the ethical difficulty related to intergenerational conflicts. Much precedent research uses Ramsey-type optimal growth theory in order to estimate the social discount rate. However, one must note that almost all the formulations neglect the existence of negative intertemporal externalities. This problem is vital when one analyzes the global warming problem mainly caused by the excess concentration of carbon dioxide (CO<sub>2</sub>). This is because an adjoining effect of capital accumulation exists besides the improvement of product capacity, which is reflected in the rate of interest (or equivalently, the marginal productivity of capital). That is, one cannot neglect a negative externality to the future productivity that originates from the excess emissions of CO<sub>2</sub>. Accordingly, following the optimal growth theory, the effective social discount rate should be heightened by a proportional carbon tax to suppress future excess consumption/ emissions than in the case of the existing analyses, which exclude such an intertemporal external diseconomy.
文摘The Ramsey rule is regarded as a convenient vehicle for estimating the social discount rate in general. Carbon pricing is treated as another theory of environmental economics. This study clarifies the theoretical relationship between the Ramsey rule and optimal carbon price, which has been overlooked in the existing research. It succeeds in deriving the optimal carbon price from the modified Ramsey rule in stationary state. Since the Ramsey rule decides the dynamics of an economy and a stationary state is its destination, by using the optimization condition of individual who are assumed to live infinitesimally short life, we can solve the optimal carbon price at stationary state.
文摘When considering emissions control problems associated with carbon dioxide (CO2), social planning over quite a long-term horizon is usually considered to be necessary because it takes much time for the full absorption of CO2 by oceans and forests. Sometimes the required time horizon even becomes infinite. Such a fact seems to impose patience beyond the limits of human cognition. However, this study proves that the first-best emissions scenario can be achieved only by local altruism, which is dubbed parentage. Parentage is defined as the action of applying zero social discount rate to its subsequent generation, and discounting the utility of generations thereafter infinitely. In this sense, the nearly first-best emissions scenario is feasible within the ordinal cognition and benevolence of human beings. This paper also examines the definition of egalitarian sustainability, in which the utility of every generation must be kept constant, and reveals that such a definition of sustainability possibly provokes the inefficient intergenerational allocation of CO2. This is because the vested interest of the predecessors is put much importance in the process of the planning. It is required more rigid sustainability concept, in which the utility of each generation is no less decreasing through time and at least strictly increasing locally, to achieve the efficient allocation of CO2. One will find that the intergenerational allocation by the local altruism satisfies this property.
