The Zero Discounting and Maximin Optimal Paths in a Simple Model of Global Warming

Journal article: Following Stollery (1998), we extend the Solow– Dasgupta–Heal model to analyze the effects of global warming The rise of temperature is caused by the use of fossil resources so that the temperature level can be linked to the remaining stock of these resources. The rise of temperature affects both productivity and utility. We characterize optimal solutions for the maximin and zero-discounting cases and present closed form solutions for the case where the production and utility functions are Cobb-Douglas, and the temperature level is an exponential function of the remaining stock of resources. We show that a greater weight of temperature in intratemporal preferences or a larger intertemporal elasticity of substitution both lead to postpone resource use.

Author(s)

Antoine d’Autume, John M. Hartwick, Katheline Schubert

Journal
  • Mathematical Social Sciences
Date of publication
  • 2010
Keywords JEL
Q32
Keywords
  • Global warming
  • Zero discounting
  • Maximin
Pages
  • 193-207
Version
  • 1
Volume
  • 59