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Clean versus Dirty Economic Growth

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  • Tapio Palokangas

Abstract

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.

Suggested Citation

  • Tapio Palokangas, 2012. "Clean versus Dirty Economic Growth," DEGIT Conference Papers c017_047, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c017_047
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    File URL: http://degit.sam.sdu.dk/papers/degit_17/C017_047.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ulla Lehmijoki, 2012. "Optimal Pollution, Optimal Population, and Sustainability," DEGIT Conference Papers c017_044, DEGIT, Dynamics, Economic Growth, and International Trade.

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    More about this item

    Keywords

    pollutants; growth and environment; endogenous public policy; economic integration; environmental Kuznets curve;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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