Explaining Environmental Kuznets Curves: How Pollution Induces Policy and New Technologies

Production often causes pollution as a by-product.Once pollution problems become too severe, regulation is introduced by political authorities which forces the economy to make a transition to cleaner production processes.We model this transition as a change in "general purpose technology" (GPT) and investigate how it interferes with economic growth driven by quality-improvements.The model gives an explanation for the inverted U-shaped relationship found in empirical research for many pollutants, often referred to as the Environmental Kuznets Curve (EKC).We provide an analytical foundation for the claim that the rise and decline of pollution can be explained by policy-induced technology shifts. KKeywords: pollution; environmental policy; technological change; economic growth;

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.economic growth;natural resources;investment;incentives;technological change;sustainable development;prices;research and development

Explaining Environmental Kuznets Curves:How Pollution Induces Policy and New Technologies

Production often causes pollution as a by-product.Once pollution problems become too severe, regulation is introduced by political authorities which forces the economy to make a transition to cleaner production processes.We model this transition as a change in "general purpose technology" (GPT) and investigate how it interferes with economic growth driven by quality-improvements.The model gives an explanation for the inverted U-shaped relationship found in empirical research for many pollutants, often referred to as the Environmental Kuznets Curve (EKC).We provide an analytical foundation for the claim that the rise and decline of pollution can be explained by policy-induced technology shifts. KKeywords: pollution; environmental policy; technological change; economic growth;