Pollution and economic activity : a theoretical study

Abstract

This thesis is a theoretical investigation of the basic relationships between pollution and economic activity. The study considers both the positive and normative economic aspects of the pollution problem, although more attention is paid to the latter. Or major interest is the relationship between pollution and economic growth. The main body of the thesis commences with an analysis of an uncontrolled economy. Here we are interested in the stability characteristics of the growth process. From the stability of uncontrolled systems we turn to the optimality of controlled systems. Employing Pontryagin's Maximum Principle we analyse the optimal control of economic activity over time. Initially we consider the control of pollution in the absence of economic growth. The joint problems of optimal investment and pollution control are then considered. In order to better examine the general equilibrium nature of the pollution problem we consider a two sector model.