Chapter

Environment and Development

Pranab Bardhan and Christopher Udry

in Development Microeconomics

Published in print May 1999 | ISBN: 9780198773719
Published online November 2003 | e-ISBN: 9780191595929 | DOI: http://dx.doi.org/10.1093/0198773714.003.0013
 Environment and Development

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Begins with a note on the two‐way relationship between poverty and the environment and on the U‐shaped curve relating economic development and environmental quality. The next section elucidates the problem of overexploitation of natural resources that arises from an institutional failure to cope with the externalities involved. The conventional prescription is the establishment of well‐defined property rights, and so next the problems involved in its implementation through privatization or nationalization are discussed. Then, the scope for community‐level environmental management through cooperation based on incentives and penalties is analyzed, with the focus on game theoretic models of repeated Prisoners’ Dilemma and assurance games. The last section studies the relationship between trade and pollution in a model with endogenous environmental taxes.

Keywords: environment; environmental management; environmental tax; externalities; game theory; natural resources; poverty; Prisoners’ Dilemma; property rights

Chapter.  6508 words.  Illustrated.

Subjects: Economic Development and Growth

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