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Industrialization and environmental externalities in a Solow-type model

Angelo Antoci, Paolo Russu (), Serena Sordi and Elisa Ticci ()

Journal of Economic Dynamics and Control, 2014, vol. 47, issue C, 211-224

Abstract: In this paper we examine the role played by environmental externalities in shaping the dynamics of an economy with two sectors (a farming sector and an industrial one), free inter-sectoral labor mobility and heterogeneous agents (workers/farmers and industrial entrepreneurs). We find that, in the presence of the environmental pressure of the economic activity of the industrial sector, the stability properties of the equilibria and their features in terms of environmental preservation, welfare outcomes and sectoral allocation of labor are sensitive to the level of carrying capacity. We show that an endogenous process of industrialization associated with a reduction in farmers/workers׳ welfare can emerge.

Keywords: Environmental negative externalities; Industrialization; Economic growth with heterogeneous agents (search for similar items in EconPapers)
JEL-codes: D62 O11 O13 O15 O41 Q20 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1016/j.jedc.2014.08.009

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