An environmental restriction and income distribution in a capitalist economy

Let us consider a growing economy where capitalists organize production emitting pollutants. The government is supposed to issue emission rights in order to control the amount of emitted pollutants, while capitalists must control their emission of pollutants in accordance with the amount of emission rights they buy. It is assumed that workers are also allowed to purchase emission rights. We show that the conventional inverse relationship holds between the wage rate and the profit rate, and between per capita consumption and the growth rate in this economy. We also study how economic variables such as the wage rate and per capita consumption are affected by the workers’ purchase of emission rights.