- Department of Economics, Swedish University of Agricultural Sciences
Growth, pollution, policy!
We investigate long-run patterns in pollution flows in an optimally regulated, growing economy in which consumption and environmental quality are imperfectly substitutable and pollution is a by-product of production. We show that by-production implies that a scale effect will always drive increasing pollution when productivity is sufficiently low. On the other hand, if a clean technology exists it will always be chosen in the long run (hence emissions will approach zero) because for any strictly positive flow of pollution, willingness to pay to reduce that flow grows without bound as consumption grows without bound, whereas the cost of switching is bounded. We clarify the intuition using a specified model in which pollution arises as a by-product of the use of natural-resource inputs. (C) 2020 Elsevier B.V. All rights reserved.
Economic growth; Pollution; Natural resources; Environmental Kuznets curve; Free disposability
European Economic Review
2020, Volume: 126, article number: 103455
Sustainable Development Goals
SDG12 Responsible consumption and production
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