Karim Eslamloueyan; Ali Hussein Ostadzad
Abstract
Environmental tax and subsidy are two key instruments used in many countries to prevent environmental degradation and to achieve sustainable development. Using game theoretic approach, this paper develops and calibrates a model to determine optimum indirect environmental tax for Iran. More specifically, ...
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Environmental tax and subsidy are two key instruments used in many countries to prevent environmental degradation and to achieve sustainable development. Using game theoretic approach, this paper develops and calibrates a model to determine optimum indirect environmental tax for Iran. More specifically, in the first stage the government sets green taxes and subsides, and in the second stage, the final goods and energy producing firms take these rates and choose their inputs. This dynamic game is solved by backward induction. Prior to our calibration, the production functions for fossil energy, renewable energy - as an intermediate goods - and final goods are estimated. The model is calibrated by using the Iranian data for the period 2015. The results indicate that the optimum green tax rate on fossil energy producing firm and final goods firm are 18 and 9 percent, respectively. These results have important policy implications for policymakers and social planners in Iran.
Karim Islamluian Islamluian; Ali Hossein Ostadzad
Volume 2, Issue 5 , January 2013, , Pages 1-48
Abstract
The main purpose of this study is to develop a model for determining the optimal shares of renewable and non-renewable sources of energy in a sustainable growth model. We develop an optimal control model in which nonrenewable and renewable sources of energy are inputs of production. The model allows ...
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The main purpose of this study is to develop a model for determining the optimal shares of renewable and non-renewable sources of energy in a sustainable growth model. We develop an optimal control model in which nonrenewable and renewable sources of energy are inputs of production. The model allows us to determine the optimal shares of renewable and nonrenewable energy inputs. Finally, we use the model to determine these shares for Iran. Genetic algorithms technique is used to estimate the coefficient for production and utility functions. We also estimate the pollution equation. Using these parameters, we derive the optimal paths for consumption, output and renewable and nonrenewable energy shares in Iran. The results show that the optimal share of renewable energy in total energy consumption is about 0.8 percent in 2010. While the actual share of renewable energy in Iran was 0.4 percent. Moreover, our model predicts this share should rise to 2.1 percent of total energy consumption by 2021 to be able to stay on sustainable growth path. This requires an average growth rate of 26 percent in renewable energy production each year.
