Chapter

Public, Private and Environmental Goods

Agnar Sandmo

in The Public Economics of the Environment

Published in print April 2000 | ISBN: 9780198297987
Published online November 2003 | e-ISBN: 9780191596858 | DOI: http://dx.doi.org/10.1093/019829798X.003.0002

Series: The Lindahl Lectures

Public, Private and Environmental Goods

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The basic general equilibrium model of resource allocation is extended to take environmental goods and externalities into account. The conditions for social welfare maximization and Pareto optimality are derived and compared with the characterization of competitive market equilibrium. The optimality conditions are then used to characterize optimal environmental taxes under the simplifying assumption that there are no other distortions in the economy. The analytical framework is generalized to take account of uncertainty and resource allocation over time, and includes discussions of attitudes to risk and time discounting.

Keywords: competitive equilibrium; discounting; Pareto optimality; resource allocation; social welfare; uncertainty

Chapter.  7172 words. 

Subjects: Economic Development and Growth

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