A dynamic general equilibrium model of pollution abatement under learning by doing

- Extend the model of Beladi et al. (2013) with learning by doing.
- Investigate the dynamic general equilibrium model of pollution abatement.
- Analyze the steady-state equilibrium properties of emission permits and pollution treatment.
- Derive the steady-state optimal levels of emission permits and pollution treatment.

In 2013, Beladi et al. constructed a dynamic general equilibrium model of pollution, and characterized a steady-state equilibrium. In this paper, we extend Beladi et al.'s model to an even more general model in which the pollution abatement costs under learning by doing are taken into account. In our model, the instantaneous abatement costs depend on both the rate of abatement and the experience of using a technology. Our objective is to apply optimal control theory to investigate the dynamic general equilibrium model of pollution abatement, and derive the steady-state equilibrium properties and optimal levels of emission permits and pollution treatment.