Optimality of irreversible pollution accumulation

This paper considers optimal pollution accumulation when the decay function has an inverted-U shape. Such decay functions have empirical relevance but they lead to nonconvexities in dynamic optimization. The nonconvexity problem is handled here by applying a two-stage optimization procedure. The analysis shows that two qualitatively different optimality candidates may exist simultaneously. We identify cases where the choice can be made on a priori grounds and cases where it requires computation of the present values of both optimality candidates. An optimal emission trajectory leading to irreversible pollution is typically nonmonotonic.