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The inverted pyramid: A neo-Ricardian view on the economy–environment relationship

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  • Kemp-Benedict, Eric

Abstract

In ecological economics, natural resources – which may contribute only a small amount to GDP – are viewed as fundamental to the functioning of the economy. They are sometimes pictured as sitting at the base of an inverted pyramid, with the rest of the economy balanced on top of them. In this paper we show that when prices are set by markup, a standard heterodox assumption, then the “inverted pyramid” picture of the economy emerges naturally in a neo-Ricardian model. We demonstrate the use of the model with brief applications to biophysical economics. The paper is one of a growing number that use heterodox macroeconomics to address questions in ecological economics.

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  • Kemp-Benedict, Eric, 2014. "The inverted pyramid: A neo-Ricardian view on the economy–environment relationship," Ecological Economics, Elsevier, vol. 107(C), pages 230-241.
  • Handle: RePEc:eee:ecolec:v:107:y:2014:i:c:p:230-241
    DOI: 10.1016/j.ecolecon.2014.08.012
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    3. Ciarli, Tommaso & Savona, Maria, 2019. "Modelling the Evolution of Economic Structure and Climate Change: A Review," Ecological Economics, Elsevier, vol. 158(C), pages 51-64.
    4. Cahen-Fourot, Louison & Campiglio, Emanuele & Dawkins, Elena & Godin, Antoine & Kemp-Benedict, Eric, 2020. "Looking for the Inverted Pyramid: An Application Using Input-Output Networks," Ecological Economics, Elsevier, vol. 169(C).
    5. Kemp-Benedict, Eric, 2014. "Shifting to a Green Economy: Lock-in, Path Dependence, and Policy Options," MPRA Paper 60175, University Library of Munich, Germany.
    6. Hardt, Lukas & O'Neill, Daniel W., 2017. "Ecological Macroeconomic Models: Assessing Current Developments," Ecological Economics, Elsevier, vol. 134(C), pages 198-211.
    7. Antoine GODIN & Paul HADJI-LAZARO, 2020. "Demand-induced transition risks: A systemic approach applied to South Africa," Working Paper b86d90ca-ea16-401e-9fac-4, Agence française de développement.
    8. Yoann Verger, 2018. "First steps for a Sraffian ecological economics. An answer to Martins' “The Classical Circular Economy, Sraffian Ecological Economics and the Capabilities Approach”," Working Papers hal-01700228, HAL.

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