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Knowledge Spillover, Transboundary Pollution, and Growth

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  • Süheyla Özyildirim

    () (Bilkent University)

  • Nedim M. Alemdar

    () (Bilkent University)

Abstract

This paper contributes to the recent literature exploring linkages between international trade, environmental degradation, and growth by bringing to the fore the dynamic gaming aspects of these issues. We use genetic algorithms (GA) to search for optimal policies in the presence of knowledge spillovers and transboundary pollution in a dynamic trade game between North and South. Knowledge accumulation and spillovers bring about additional growth/pollution tradeoffs and so help us to identify sources of inefficiencies that have been hitherto overlooked. In the GA search for optimal regional policies, noncooperative and cooperative modes of behavior are considered. Noncooperative trade compounds inefficiencies stemming from externalities. Cooperative trade policies are efficient but not credible. Short of a joint maximization of the global welfare, transfer of knowledge remains a viable route to improve world welfare.

Suggested Citation

  • Süheyla Özyildirim & Nedim M. Alemdar, 1999. "Knowledge Spillover, Transboundary Pollution, and Growth," Computing in Economics and Finance 1999 322, Society for Computational Economics.
  • Handle: RePEc:sce:scecf9:322
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    1. Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-874, September.
    2. Frederick Ploeg & Aart Zeeuw, 1992. "International aspects of pollution control," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(2), pages 117-139, March.
    3. Galor, Oded, 1986. "Global dynamic inefficiency in the absence of international policy coordination: A north-south case," Journal of International Economics, Elsevier, vol. 21(1-2), pages 137-149, August.
    4. Brian R. Copeland & M. Scott Taylor, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 755-787.
    5. Mercenier, Jean & Michel, Philippe, 1994. "Discrete-Time Finite Horizon Appromixation of Infinite Horizon Optimization Problems with Steady-State Invariance," Econometrica, Econometric Society, vol. 62(3), pages 635-656, May.
    6. Dockner Engelbert J. & Van Long Ngo, 1993. "International Pollution Control: Cooperative versus Noncooperative Strategies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 13-29, July.
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