Long-run average welfare in a pollution accumulation model

This paper studies the pollution accumulation problem so as to maximize the long-run average welfare within a stochastic framework. We consider a sequence of optimal pollution accumulation problems under the discounted criterion. The Hamilton - Jacobi - Bellman (HJB, for short) equation associated with the long-run average problem is obtained as a limit of HJB equations for discounted models. In particular, we solve the problem for first-order disutility functions and present some comparative dynamics results.