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On the Effect of Technological Progress on Pollution: a New Distortion in an Endogenous Growth Model

Author

Listed:
  • Alexandra Ferreira Lopes

    (Departamento de Economia, ISCTE)

  • Tiago Sequeira e Catarina Roseta Palma

    (Departamento de Gestão e Economia, Universidade da Beira Interior; Departamento de Economia, ISCTE.)

Abstract

We derive a model of endogenous growth with physical capital, human capital and technological progress through quality-ladders. We introduce welfare-decreasing pollution in the model, which can be reduced through the development of cleaner technologies. From the quantitative analysis of the model we show clear evidence that the new externality from technological progress to pollution considered in this model is sufficiently strong to induce underinvestment in R&D as an outcome of the decentralized equilibrium. An important policy implication of the main result of this article is a justification to subsidize the research in cleaner technologies.

Suggested Citation

  • Alexandra Ferreira Lopes & Tiago Sequeira e Catarina Roseta Palma, 2010. "On the Effect of Technological Progress on Pollution: a New Distortion in an Endogenous Growth Model," Working Papers de Gestão, Economia e Marketing (Management, Economics and Marketing Working Papers) td09_2010, Universidade da Beira Interior, Departamento de Gestão e Economia (Portugal).
    • Handle: RePEc:csh:wpecon:td09_2010
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    More about this item

    Keywords

    Environmental Pollution; R&D; Social Capital; Human Capital; Economic Growth;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • 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
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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