Environmental Regulation, Directed Technical Change, and Economic Growth: Theoretic Model and Evidence from China

Juan Tang, Shihu Zhong and Guocheng Xiang

International Regional Science Review, 2019, vol. 42, issue 5-6, 519-549

Abstract: Can environmental regulation be used to promote directed technical change and economic growth simultaneously? We construct an endogenous economic growth model that includes environmental regulation, the extent of environmental pollution, and economic performance in a general equilibrium framework. We show that in the absence of government intervention, environmental pollution will not automatically disappear as economic growth increases. Furthermore, “threshold constraints†result from “path dependence†in the type of innovation; only when the rate of carbon tax and carbon reduction subsidy reaches a certain extent will individuals (or producers) redirect technical change toward “clean†energy production technologies innovation and away from “dirty†energy production technologies. Our article also discloses the intrinsic principle and micromechanism of environmental regulation to promote economic growth and finds that strict environmental regulation will both significantly promote the evolving labor division in clean energy production technologies innovation and achieve the benefits of improved average labor productivity in the production sector and the market size of goods, so that the benefit exceeds the switching cost.

Keywords: environmental regulation; innovation; directed technical change; economic growth; win-win effect (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0160017619835901 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:inrsre:v:42:y:2019:i:5-6:p:519-549

DOI: 10.1177/0160017619835901

Access Statistics for this article

More articles in International Regional Science Review
Bibliographic data for series maintained by SAGE Publications ().