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Clean versus Dirty Economic Growth

  • Tapio Palokangas

This document considers an economy with many regions and two engines of growth: horizontal R&D, which increases the number of polluting product lines; and vertical R&D, which improves productivity in these lines. Pollution in any region decreases welfare in all regions. Any group of regions can form a jurisdiction where a common policy maker controls pollution. Large jurisdictions, which can better internalize externality through pollution, perform vertical R&D. Because jurisdictions face decreasing unit costs of administration, they expand, performing first horizontal and then vertical R&D. This generates an environmental Kuznets curve (EKC) on which pollution first aggravates and then alleviates.

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File URL: http://degit.sam.sdu.dk/papers/degit_17/C017_047.pdf
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Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c017_047.

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Length: 22 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:deg:conpap:c017_047
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  1. Dinda, Soumyananda, 2005. "A theoretical basis for the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 53(3), pages 403-413, May.
  2. Larry E. Jones & Rodolfo E. Manuelli, 2001. "Endogenous Policy Choice: The Case of Pollution and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 369-405, July.
  3. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
  4. Ulla Lehmijoki & Tapio Palokangas, 2010. "Trade, population growth, and the environment in developing countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(4), pages 1351-1370, September.
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  6. 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.
  7. Lieb, Christoph M., 2002. "The environmental Kuznets curve and satiation: a simple static model," Environment and Development Economics, Cambridge University Press, vol. 7(03), pages 429-448, July.
  8. Andreoni, James & Levinson, Arik, 2001. "The simple analytics of the environmental Kuznets curve," Journal of Public Economics, Elsevier, vol. 80(2), pages 269-286, May.
  9. de Bruyn, S. M. & Opschoor, J. B., 1997. "Developments in the throughput-income relationship: theoretical and empirical observations," Ecological Economics, Elsevier, vol. 20(3), pages 255-268, March.
  10. William A. Brock & M. Scott Taylor, 2004. "The Green Solow Model," NBER Working Papers 10557, National Bureau of Economic Research, Inc.
  11. Sjak Smulders & Lucas Bretschger & Hannes Egli, 2011. "Economic Growth and the Diffusion of Clean Technologies: Explaining Environmental Kuznets Curves," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 49(1), pages 79-99, May.
  12. Kijima, Masaaki & Nishide, Katsumasa & Ohyama, Atsuyuki, 2010. "Economic models for the environmental Kuznets curve: A survey," Journal of Economic Dynamics and Control, Elsevier, vol. 34(7), pages 1187-1201, July.
  13. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
  14. Tapio Palokangas, 2012. "Clean versus Dirty Economic Growth," DEGIT Conference Papers c017_047, DEGIT, Dynamics, Economic Growth, and International Trade.
  15. Selden Thomas M. & Song Daqing, 1995. "Neoclassical Growth, the J Curve for Abatement, and the Inverted U Curve for Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 162-168, September.
  16. Hill, Robert J & Magnani, Elisabetta, 2002. "An Exploration of the Conceptual and Empirical Basis of the Environmental Kuznets Curve," Australian Economic Papers, Wiley Blackwell, vol. 41(2), pages 239-54, June.
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