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Environmental Policy in an Endogenous Growth Model with Expanding Variety

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  • Dominique Bianco

Abstract

In this paper, we analyze the long-term impact of an environmental policy on economic growth, pollution and welfare. A standard growth model with horizontal innovation is modified by including pollution which comes from the use of intermediate goods production. Taxation on pollution reduces profits of final good producer as well as intermediate good producers. In this setting, profit gains is explained by a realloaction of labor from intermediate goods sector to R&D sector which enhances innovation, growth and welfare while it reduces pollution.

Suggested Citation

  • Dominique Bianco, 2017. "Environmental Policy in an Endogenous Growth Model with Expanding Variety," Revue d'économie politique, Dalloz, vol. 127(6), pages 1013-1028.
    • Handle: RePEc:cai:repdal:redp_276_1013
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    Cited by:

    1. Dominique Bianco, 2022. "Does entrepreneurial behaviour matter for the strong Porter hypothesis?," Economics Bulletin, AccessEcon, vol. 42(2), pages 867-876.
    2. Afonso, Oscar, 2023. "Fiscal and monetary effects on environmental quality, growth, and welfare," Research in Economics, Elsevier, vol. 77(1), pages 202-219.

    More about this item

    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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