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3 - Analytical Results

General Equilibrium

Published online by Cambridge University Press:  02 December 2020

Zili Yang
Affiliation:
State University of New York at Binghamton
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Summary

This chapter studies the properties of environmental externality from general equilibrium perspective in the four basic models --- SEEE, SEEN, DEEE, and DEEN models. The chapter establishes the key results of environmental externality provision. They are the triangular equivalence relationship among the Lindahl equilibrium without transfer, the Nash bargaining solution with the payoffs of Cournot-Nash equilibrium as the status quo point, and the social optimum under the Lindahl weights. In this framework, the mapping of efficient solutions of the models and the simplex of social welfare weights plays a critical role. To facilitate the application of these results in empirical research, we provide analytical and numerical examples to validate these results as well as the algorithmic approach to solve the solution concepts derived from the key results. In contrast to the Lindahl equilibrium, we also critically assess the popular Benthamite and Negishi solutions of environmental externality provisions as well as transfer issues. In the appendix, we offer the programming codes in GAMS language for the numerical example.

Type
Chapter
Information
The Environment and Externality
Theory, Algorithms and Applications
, pp. 32 - 90
Publisher: Cambridge University Press
Print publication year: 2020

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  • Analytical Results
  • Zili Yang, State University of New York at Binghamton
  • Book: The Environment and Externality
  • Online publication: 02 December 2020
  • Chapter DOI: https://doi.org/10.1017/9781108762557.004
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  • Analytical Results
  • Zili Yang, State University of New York at Binghamton
  • Book: The Environment and Externality
  • Online publication: 02 December 2020
  • Chapter DOI: https://doi.org/10.1017/9781108762557.004
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Analytical Results
  • Zili Yang, State University of New York at Binghamton
  • Book: The Environment and Externality
  • Online publication: 02 December 2020
  • Chapter DOI: https://doi.org/10.1017/9781108762557.004
Available formats
×