Intertemporal equilibrium dynamics with a pollution externality

A discrete model of a market economy is coupled to an accumulating pollutant, and the intertemporal equilibrium dynamics of the resulting three-dimensional economic-environmental system is investigated through analysis and numerical methods. Conditions for the existence and stability of sustainable equilibria are studied under the usual assumption of linear uptake of the pollutant by the biosphere and under an alternative assumption of a threshold mechanism for uptake that leads to potential fold bifurcations and problems of existence for real equilibria over parts of the parameter space.