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Negative externalities as the engine of growth in an evolutionary context

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  • Antoci, Angelo
  • Bartolini, Stefano

Abstract

We present a simple growth model which has two original features: the strategic context considered, which is an evolutionary game, and the growth mechanism described, in which growth is caused by negative externalities. The emphasis in this growth mechanism is evidently different from that placed on positive externalities by current endogenous growth models. In this model welfare depends on three goods: leisure, a free environmental renewable resource, and a non-storable output. The environmental resource is subject to negative externalities, that is, it is deteriorated by the production of the output. Faced with a forced reduction of the resource, agents may react by increasing the labor supply in order to produce and consume substitutes for the diminishing resource, i. e. they can raise their defensive expenditures. The increase in production and consumption that follows, i.e. growth, generates a further deterioration of the environmental resource, thus giving rise to a self-feeding growth process. The conditions under which multiple equlibria and Pareto-worsening growth dynamics arise, are analysed. Beside showing the logical possibility that negative externalities are the engine of growth, we suggest that the case analysed may be of practical relevance, i.e., that negative externalities may play an important role in many episodes of growth. This role is widely recognized by social sciences other than economics. We suggest that the model may be interpreted as a push development model and that it may also contribute to explain some aspects of growth in advanced countries.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13908.

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Date of creation: 1999
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Handle: RePEc:pra:mprapa:13908

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Related research

Keywords: Negative externalities; environmental defensive expenditures; undesirable economic growth; evolutionary games; happiness;

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Cited by:
  1. Antoci, Angelo & Sabatini, Fabio & Sodini, Mauro, 2012. "The Solaria syndrome: Social capital in a growing hyper-technological economy," Journal of Economic Behavior & Organization, Elsevier, vol. 81(3), pages 802-814.
  2. Antoci, Angelo & Borghesi, Simone & Russu, Paolo, 2011. "Environmental protection mechanisms and technological dynamics," MPRA Paper 36597, University Library of Munich, Germany.
  3. Angelo Antoci & Pier Luigi Sacco & Paolo Vanin, 2001. "Economic Growth and Social Poverty: The Evolution of Social Participation," Bonn Econ Discussion Papers bgse13_2001, University of Bonn, Germany.
  4. Antoci, Angelo & Sodini, Mauro, 2009. "Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities," MPRA Paper 13750, University Library of Munich, Germany.
  5. Antoci, Angelo & Borghesi, Simone, 2010. "Preserving or escaping? On the welfare effects of environmental self-protective choices," MPRA Paper 22580, University Library of Munich, Germany.
  6. Antoci, Angelo & Russu, Paolo & Ticci, Elisa, 2008. "Structural change, economic growth and environmental dynamics with heterogeneous agents," MPRA Paper 13668, University Library of Munich, Germany.
  7. Angelo Antoci & Simone Borghesi, 2010. "Environmental degradation, self-protection choices and coordination failures in a North–South evolutionary model," Journal of Economic Interaction and Coordination, Springer, vol. 5(1), pages 89-107, June.
  8. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2004. "Social capital accumulation and the evolution of social partecipation," AICCON Working Papers 5-2004, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
  9. Antoci, Angelo & Russu, Paolo & Ticci, Elisa, 2009. "Distributive impact of structural change: Does environmental degradation matter?," Structural Change and Economic Dynamics, Elsevier, vol. 20(4), pages 266-278, December.
  10. Antoci, Angelo, 2009. "Environmental degradation as engine of undesirable economic growth via self-protection consumption choices," Ecological Economics, Elsevier, vol. 68(5), pages 1385-1397, March.
  11. Angelo Antoci, 2005. "Environmental Resources Depletion and Interplay Between Negative and Positive Externalities in a Growth Model," Working Papers 2005.9, Fondazione Eni Enrico Mattei.

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