Sustainability and Substitution of Exhaustible Natural Resources. How resource prices affect long-term R&D investments
Traditional resource economics has been criticised for assuming too high elasticities of substitution, not observing material balance principles and relying too much on planner solutions to obtain long-term growth. By analysing a multi-sector R&D-based endogenous growth model with exhaustible natural resources, labour, knowledge, and physical capital as inputs, the present paper addresses this critique. We study transitional dynamics and the long-term growth path and identify conditions under which firms keep spending on research and development. We demonstrate that long-run growth can be sustained under free market conditions even when elasticities of substitution between capital and resources are low and the supply of physical capital is limited, which seems to be crucial for today’s sustainability debate.
|Date of creation:||Sep 2003|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.feem.it/
More information through EDIRC
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.:
- Romer, Paul M, 1990.
"Endogenous Technological Change,"
Journal of Political Economy,
University of Chicago Press, vol. 98(5), pages S71-102, October.
- Bovenberg, A.L. & Smulders, S., 1993.
"Environmental Quality and Pollution-Saving Technological Change in Two- Sector Endogenous Growth Model,"
9321, Tilburg - Center for Economic Research.
- Bovenberg, A.L. & Smulders, J.A., 1993. "Environmental quality and pollution-saving technological change in a two-sector endogenous growth model," Discussion Paper 1993-21, Tilburg University, Center for Economic Research.
- Withagen, Cees & B. Asheim, Geir, 1998. "Characterizing sustainability: The converse of Hartwick's rule," Journal of Economic Dynamics and Control, Elsevier, vol. 23(1), pages 159-165, September.
- Charles I. Jones, .
"Growth: With or Without Scale Effects?,"
99001, Stanford University, Department of Economics.
- Christian Groth & Poul Schou, 2002.
"Can non-renewable resources alleviate the knife-edge character of endogenous growth?,"
Oxford Economic Papers,
Oxford University Press, vol. 54(3), pages 386-411, July.
- Christian Groth & Poul Schou, 2000. "Can Nonrenewable Resources Alleviate the Knife-edge Character of Endogenous Growth," Discussion Papers 00-02, University of Copenhagen. Department of Economics.
- Christian Groth, 2000. "Can Nonrenewable Resources Alleviate the Knife-edge Character of Endogenous Growth?," Econometric Society World Congress 2000 Contributed Papers 1480, Econometric Society.
- Groth, C. & Schou, P., 2000. "Can Nonrenewable Resources Alleviate the Knife-Edge Character of Endogenous Growth," Papers 00-02, Carleton - School of Public Administration.
- Hartwick, John M, 1977.
"Intergenerational Equity and the Investing of Rents from Exhaustible Resources,"
American Economic Review,
American Economic Association, vol. 67(5), pages 972-74, December.
- John Hartwick, 1976. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," Working Papers 220, Queen's University, Department of Economics.
- Christian Scholz & Georg Ziemes, 1999. "Exhaustible Resources, Monopolistic Competition, and Endogenous Growth," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 13(2), pages 169-185, March.
- repec:ner:tilbur:urn:nbn:nl:ui:12-153411 is not listed on IDEAS
- Poul Schou, 2000. "Polluting Non-Renewable Resources and Growth," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 16(2), pages 211-227, June.
- Lans Bovenberg, A. & Smulders, Sjak, 1995.
"Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model,"
Journal of Public Economics,
Elsevier, vol. 57(3), pages 369-391, July.
- Bovenberg, A.L. & Smulders, J.A., 1995. "Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model," Other publications TiSEM 6784bb12-71fb-45a5-bf7e-8, Tilburg University, School of Economics and Management.
- R. M. Solow, 1973. "Intergenerational Equity and Exhaustable Resources," Working papers 103, Massachusetts Institute of Technology (MIT), Department of Economics.
- Heal, G., 1990.
"The Optimal Use Of Exhaustible Resources,"
fb-_90-10, Columbia - Graduate School of Business.
- 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.
- Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-84, August.
- Bretschger, Lucas, 1998. "How to substitute in order to sustain: knowledge driven growth under environmental restrictions," Environment and Development Economics, Cambridge University Press, vol. 3(04), pages 425-442, October.
- 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.
When requesting a correction, please mention this item's handle: RePEc:fem:femwpa:2003.87. 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: (barbara racah)
If references are entirely missing, you can add them using this form.