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Income inequality and the development of environmental technologies

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  • Vona, Francesco
  • Patriarca, Fabrizio

Abstract

Within rich countries, a large dispersion in the capacity of generating environmental innovations appears correlated to the level of inequality. Previous works analyze the relationship between inequality and environmental quality in a static setting. This paper builds a dynamic model more suitable to analyze technological externalities driven by the emergence of a new demand for green products. Under fairly general assumptions on technology and preferences, we show that: 1. the relationship between inequality and environmental innovation is highly non-linear and crucially depends on per-capita income; 2. an excessive inequality harms the development of environmental technologies especially in rich countries. Key to our results is the fact that externalities generated by pioneer consumers of green products benefit the entire population only for relatively low income distances. The empirical analysis robustly confirms our theoretical results, that is: whereas for rich countries inequality negatively affects the diffusion of innovations, per-capita income is paramount in poorer ones.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 70 (2011)
Issue (Month): 11 (September)
Pages: 2201-2213

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Handle: RePEc:eee:ecolec:v:70:y:2011:i:11:p:2201-2213

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Web page: http://www.elsevier.com/locate/ecolecon

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Keywords: Inequality Demand Environmental innovations Pioneer consumer;

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Citations

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Cited by:
  1. Fabrizio Patriarca & Francesco Vona, 2009. "Structural Change and the Income Distribution: a Post-Keynesian disequilibrium model," Working Papers - Dipartimento di Economia 5, Dipartimento di Economia, Sapienza University of Rome, revised 2009.
  2. Francesco Nicolli & Francesco Vona & Lionel Nesta, 2012. "Determinants of Renewable Energy Innovation: Environmental Policies vs. Market Regulation," Working Papers 201204, University of Ferrara, Department of Economics.
  3. Francesco Vona & Francesco Nicolli, 2013. "Energy market liberalisation and renewable energy policies in OECD countries," Sciences Po publications 2013-10, Sciences Po.
  4. Francesco Nicolli & Francesco Vona, 2012. "The evolution of renewable energy policy in Oecd countries:aggregate indicators and determinants," Documents de Travail de l'OFCE 2012-13, Observatoire Francais des Conjonctures Economiques (OFCE).
  5. repec:spo:wpecon:info:hdl:2441/f6h8764enu2lskk9p544jc8op is not listed on IDEAS
  6. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09j0h0ji242 is not listed on IDEAS
  7. Esposito, Piero & Patriarca, Fabrizio & Perini, Luigi & Salvati, Luca, 2013. "Economic Convergence with Divergence in Environmental Quality? Desertification Risk and the Economic Structure of a Mediterranean Country (1960-2010)," MPRA Paper 52601, University Library of Munich, Germany.

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