Discussion Paper
No. 2009-4 | January 06, 2009
Ralph Winkler
Now or Never: Environmental Protection under Hyperbolic Discounting

Abstract

The author analyzes the optimal investment in environmental protection in a model of an infinite series of non-overlapping hyperbolically discounting agents. He shows that without a commitment mechanism society is eventually stuck in a situation where all agents prefer further investment in the long run, yet neither present nor future agents will actually ever invest. Such an outcome is not only unsatisfactory for each generation but may also be inefficient in a Pareto sense. The author’s results are consistent with real world observations, and thus provide a new explanation for weak environmental policy performance.Paper submitted to the special issue “Discounting the Long-Run Future and Sustainable Development”

JEL Classification:

D90, Q50, Q58

Links

Cite As

[Please cite the corresponding journal article] Ralph Winkler (2009). Now or Never: Environmental Protection under Hyperbolic Discounting. Economics Discussion Papers, No 2009-4, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2009-4


Comments and Questions



Fabio Antoniou and Dr. Vangelis Dyikitopoulos - Referee Report
February 16, 2009 - 11:17
see attached file

Ralph Winkler - Revision Report
April 06, 2009 - 09:00
see attached file

Ralph Winkler - Revised Manuscript
April 06, 2009 - 09:01
see attached file