Abstract
The paper provides a theoretical explanation for the inverted U-shaped relation between pollution and income often found in empirical research (Environmental Kuznets Curve). We model the transition in the pollution pattern as a change in general purpose technologies and investigate how it interferes with economic growth driven by quality improvements. We provide an analytical foundation for the claim that the rise and decline of pollution can be explained by endogenous innovations, policy-induced technology shifts, and intrasectoral changes. Once environmental degradation becomes too severe, regulation is introduced by which society forces the economy to make a transition to cleaner production.
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We thank Richard Nahuis, Christoph Lieb, Karen Pittel and two anonymous referees for helpful comments.
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Smulders, S., Bretschger, L. & Egli, H. Economic Growth and the Diffusion of Clean Technologies: Explaining Environmental Kuznets Curves. Environ Resource Econ 49, 79–99 (2011). https://doi.org/10.1007/s10640-010-9425-y
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DOI: https://doi.org/10.1007/s10640-010-9425-y