Dynamics and optimal control in a spatially structured economic growth model with pollution diffusion and environmental taxation

In the first part of this paper we present a spatially structured dynamic economic growth model which takes into account the level of pollution and a possible taxation based on the amount of produced pollution. In the second part we analyze an optimal harvesting control problem with an objective function composed of three terms, namely the intertemporal utility of the decision maker, the space–time average of the level of pollution in the habitat, and the disutility due to the imposition of taxation.     

Modelling taxation and redistribution: A discrete active particle kinetic approach

In this paper a general framework is proposed, suitable for the modelling of the taxation and redistribution process in a closed society. This framework arises within a discrete kinetic approach for active particle systems, and is expressed by a system of nonlinear ordinary differential equations. It is intended to describe the evolution of the wealth distribution over the population, based on the interactions of single individuals. The framework is then employed towards the construction of a toy model, which is analytically and computationally investigated.     

The impact of disaster on the strategic interaction between company and government

A company allocates a resource between safety effort and production. The government earns taxes on production. The disaster probability is modeled as a contest between the disaster magnitude and the two players’ safety efforts. The model illustrates that safety efforts are strategic substitutes and inverse U shaped in the disaster magnitude. The company’s safety effort increases, and the government’s safety effort decreases, in taxation. Taxation can ameliorate companies’ free riding on governments’ safety efforts. With sufficiently large production, the government prefers, and the company does not prefer, raising taxation above 0%. For the government, an upper limit usually exists above which taxation cannot be profitably increased. The model shows how both or no players exert safety efforts when the disaster magnitude is small and large respectively, and how they free ride on each other’s safety efforts when the disaster magnitude is intermediate. The company free rides when the unit production cost is low so that the large profits outweigh the negative impact of the disaster. With endogenized taxation determined by the government, the tax rate decreases in the disaster magnitude, the unit production cost, the government’s unit cost of safety effort, and how the company is negatively affected by the disaster. The tax rate increases in the company’s resource and how the government is negatively affected by the disaster. The tax rate is weakly U shaped in the company’s unit safety effort. The model is illustrated with numerical examples and with the oil spill disasters by BP in 2010 and by Exxon Valdez in 1989.     

Core extensions for non-balanced TU-games

A family of core extensions for cooperative TU-games is introduced. These solution concepts are non-empty when applied to non-balanced games yet coincide with the core whenever the core is non-empty. The extensions suggest how an exogenous regulator can sustain a stable and efficient outcome, financing a subsidy via individual taxes. Economic and geometric properties of the solution concepts are studied. When taxes are proportional, the proportional prenucleolus is proposed as a single-valued selection device. An application of these concepts to the decentralization of a public goods economy is discussed. We wish to thank the editor, a referee, an anonymous reviewer, Beth Allen, Marc Dudey, Yakar Kannai, Herve Moulin, Marcel Richter, Luis Sánchez-Mier, and the participants in the Microeconomic Theory Workshop at Rice University for their helpful comments.     

Accrual capital gains taxation and the lock-in effect

The recent literature on capital gains taxation suggests that assets are sold sooner when taxes are assessed and paid continuously rather than at the time of sale. Our analysis tends to support this view, for this suggestion is valid if the asset value function is convex or if it is concave and there is full or partial-loss-offset.