Could the environment be a normal good for you and an inferior good for me? A theory of context-dependent substitutability and needs - Archive ouverte HAL Access content directly
Journal Articles Resource and Energy Economics Year : 2022

Could the environment be a normal good for you and an inferior good for me? A theory of context-dependent substitutability and needs

L'environnement pourrait-il être un bien normal pour vous et un bien inférieur pour moi ? Une théorie de la substituabilité dépendante du contexte et des besoins

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Abstract

Theoretical models often assume the environment to be a normal good, irrespective of one’s income. However, a priori, nothing prohibits an environmental good from being normal for some individuals and inferior for others. We develop a conceptual framework in which private consumption and an environmental public good act as substitutes or complements for satisfying different needs. Subsequently, the environment can switch between normal and inferior depending on one’s income and environment and corresponding prevalent needs. If the environment is inferior for some range of income, then the willingness to pay for environmental preservation becomes non-monotonic with respect to income. We discuss the relevance of our framework in the context of (income-adjusted) unit benefit transfers, dual-rate discounting and the Environmental Kuznets curve.
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Origin : Publication funded by an institution

Dates and versions

hal-03693920 , version 1 (19-08-2022)

Licence

Attribution - CC BY 4.0

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Marion Dupoux, Vincent Martinet. Could the environment be a normal good for you and an inferior good for me? A theory of context-dependent substitutability and needs. Resource and Energy Economics, 2022, 69, 20 p. ⟨10.1016/j.reseneeco.2022.101316⟩. ⟨hal-03693920⟩
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