Sustainable development: Structural transformation and the consumer demand

Ramon Lopez and Sang W. Yoon

Structural Change and Economic Dynamics, 2020, vol. 52, issue C, 22-38

Abstract: This paper examines the feasibility of environmentally sustainable growth in a competitive market economy assuming various types of technological changes affecting pollution emissions and ultimately climate change. We consider two final outputs and two factors of production, accounting for both pollution flow and stock effects. If the initial level of pollution emissions satisfies certain boundary conditions, a Pigouvian pollution tax may assure sustainable growth without any further government intervention. This is true even if exogenous technological change is assumed to benefit exclusively the pollution-intensive industries (the “dirty” sector). A consumers’ composition effect (often neglected in the literature), driven by an endogenous change in the relative prices between clean and dirty final goods under an optimal pollution tax, plays a critical role in the structural transformation process to achieve long-run sustainable economic growth.

Keywords: Sustainable development; Consumption flexibility; Technological change; Optimal pollution tax (search for similar items in EconPapers)
JEL-codes: O44 Q01 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0954349X17302229
Full text for ScienceDirect subscribers only

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:eee:streco:v:52:y:2020:i:c:p:22-38

DOI: 10.1016/j.strueco.2019.09.011

Access Statistics for this article

Structural Change and Economic Dynamics is currently edited by F. Duchin, H. Hagemann, M. Landesmann, R. Scazzieri, A. Steenge and B. Verspagen

More articles in Structural Change and Economic Dynamics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().