Quantitative versus qualitative growth with recyclable resource
We reassess the issue of limits to growth in an endogenous growth model of a decentralized economy where final productions require a recyclable essential material input. The model relies on technological assumptions consistent with the material balance principle and on an explicit distinction between the material content and the quality of the produced goods. Growth follows from research activities that allow firms to improve the quality of their output and to reduce the material resource intensiveness of their production process. Even though recycling is assumed perfect, we show that 1) the material balance constraint may affect the whole transitory dynamics of the growth process; 2) quantitative growth (i.e. positive growth of material output) can only be a transitory phenomenon, long term economic growth taking exclusively the form of perpetual improvements in the quality of final goods. A long term growth path is characterized by constant values of material variables (or in a less favourable scenario, by a constant negative growth rate of those variables). We establish the existence conditions of a growth path based on quality improvements and constant material variables. It may fail to exist in a decentralized framework even though it is feasible from a purely physical point of view.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sjak Smulders, 1995.
"Entropy, environment, and endogenous economic growth,"
International Tax and Public Finance,
Springer, vol. 2(2), pages 319-340, August.
- Smulders, J.A., 1995. "Entropy, environment and endogenous economic growth," Other publications TiSEM 6d717cee-3506-4f14-8a21-a, Tilburg University, School of Economics and Management.
- Hart, Rob, 2004. "Growth, environment and innovation--a model with production vintages and environmentally oriented research," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 1078-1098, November.
- Rüdiger Pethig, 2005.
"Nonlinear Production, Abatement, Pollution and Materials Balance Reconsidered,"
CESifo Working Paper Series
1549, CESifo Group Munich.
- Pethig, Rudiger, 2006. "Non-linear production, abatement, pollution and materials balance reconsidered," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 185-204, March.
- Lucas Bretschger & Sjak Smulders, 2003.
"Sustainability and Substitution of Exhaustible Natural Resources. How resource prices affect long-term R&D investments,"
2003.87, Fondazione Eni Enrico Mattei.
- Lucas Bretschger & Sjak Smulders, 2004. "Sustainability and substitution of exhaustible natural resources. How resource prices affect long-term R&D-investments," CER-ETH Economics working paper series 03/26, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
- Bretschger, L. & Smulders, J.A., 2003. "Sustainability and Substitution of Exhaustible Natural Resources : How Resource Prices Affect Long-Term R&D Investments," Discussion Paper 2003-71, Tilburg University, Center for Economic Research.
- Ayres, Robert U. & Miller, Steven M., 1980. "The role of technological change," Journal of Environmental Economics and Management, Elsevier, vol. 7(4), pages 353-371, December.
- Bretschger, Lucas, 2005.
"Economics of technological change and the natural environment: How effective are innovations as a remedy for resource scarcity?,"
Elsevier, vol. 54(2-3), pages 148-163, August.
- Lucas Bretschger, 2003. "Economics of technological change and the natural environment: how effective are innovations as a remedy for resource scarcity?," CER-ETH Economics working paper series 03/27, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich, revised Jun 2004.
- Grimaud, Andre & Rouge, Luc, 2003. "Non-renewable resources and growth with vertical innovations: optimum, equilibrium and economic policies," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 433-453, March.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977.
"Monopolistic Competition and Optimum Product Diversity,"
American Economic Review,
American Economic Association, vol. 67(3), pages 297-308, June.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
- Daly, Herman E., 1997. "Georgescu-Roegen versus Solow/Stiglitz," Ecological Economics, Elsevier, vol. 22(3), pages 261-266, September.
- Grimaud, André & Rougé, Luc, 2003.
"Polluting Non-Renewable Resources, Innovation and Growth : Welfare and Environmental Policy,"
IDEI Working Papers
206, Institut d'Économie Industrielle (IDEI), Toulouse.
- Grimaud, Andre & Rouge, Luc, 2005. "Polluting non-renewable resources, innovation and growth: welfare and environmental policy," Resource and Energy Economics, Elsevier, vol. 27(2), pages 109-129, June.
- Krysiak, Frank C., 2006. "Entropy, limits to growth, and the prospects for weak sustainability," Ecological Economics, Elsevier, vol. 58(1), pages 182-191, June.
- van den Bergh, Jeroen C. J. M. & Nijkamp, Peter, 1994. "Dynamic macro modelling and materials balance : Economic-environmental integration for sustainable development," Economic Modelling, Elsevier, vol. 11(3), pages 283-307, July.
- Anderson, Curt L., 1987. "The production process: Inputs and wastes," Journal of Environmental Economics and Management, Elsevier, vol. 14(1), pages 1-12, March.
- Groth, Christian & Schou, Poul, 2007. "Growth and non-renewable resources: The different roles of capital and resource taxes," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 80-98, January.
- Stokey, Nancy L, 1998. "Are There Limits to Growth?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 1-31, February.
- Akao, Ken-Ichi & Managi, Shunsuke, 2007. "Feasibility and optimality of sustainable growth under materials balance," Journal of Economic Dynamics and Control, Elsevier, vol. 31(12), pages 3778-3790, December.
- Ayres, Robert U., 2007. "On the practical limits to substitution," Ecological Economics, Elsevier, vol. 61(1), pages 115-128, February.
- Islam, Saiful, 1985. "Effect of an essential input on isoquants and substitution elasticities," Energy Economics, Elsevier, vol. 7(3), pages 194-196, July.
- Stefan baumgärtner, 2004. "The Inada Conditions for Material Resource Inputs Reconsidered," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 29(3), pages 307-322, November.
- Ayres, Robert U. & van den Bergh, Jeroen C.J.M., 2005. "A theory of economic growth with material/energy resources and dematerialization: Interaction of three growth mechanisms," Ecological Economics, Elsevier, vol. 55(1), pages 96-118, October.
- Krysiak, Frank C. & Krysiak, Daniela, 2003. "Production, consumption, and general equilibrium with physical constraints," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 513-538, November.
- Jean-Francois FAGNART & Marc GERMAIN, 2009. "On the Feasibility of Perpetual Growth in a Decentralized Economy Subject to Environmental Constraints," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2009037, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Cleveland, Cutler J. & Ruth, Matthias, 1997. "When, where, and by how much do biophysical limits constrain the economic process?: A survey of Nicholas Georgescu-Roegen's contribution to ecological economics," Ecological Economics, Elsevier, vol. 22(3), pages 203-223, September.
- Cynthia Lin, C.-Y. & Wagner, Gernot, 2007. "Steady-state growth in a Hotelling model of resource extraction," Journal of Environmental Economics and Management, Elsevier, vol. 54(1), pages 68-83, July.
When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:70:y:2011:i:5:p:929-941. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.