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| Pommeret, Aude; Prieur, Fabien. |
| The design of environmental policy typically takes place within a framework in which uncertainty over the future impact of pollution and two different kinds of irreversibilities interact. The first kind of irreversibility concerns the sunk cost of environmental degradation; the second is related to the sunk cost of environmental policy. Clearly, the two irreversibilities pull in opposite directions: policy irreversibility leads to more pollution and a less/later policy while environmental irreversibility generates less pollution and a more/sooner policy. Using a real option approach and an infinite time horizon model, this paper considers both irreversibilities simultaneously. The model first is developed by paying particular attention to the option values... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Environmental Policy; Environmental Irreversibility; Policy Irreversibility; Environmental Economics and Policy; Q58; D81. |
| Ano: 2009 |
URL: http://purl.umn.edu/50359 |
