This document considers an economy with many regions and two engines of growth: horizontal R&D, which increases the number of polluting product lines; and vertical R&D, which improves productivity in these lines. Pollution in any region decreases welfare in all regions. Any group of regions can form a jurisdiction where a common policy maker controls pollution. Large jurisdictions, which can better internalize externality through pollution, perform vertical R&D. Because jurisdictions face decreasing unit costs of administration, they expand, performing first horizontal and then vertical R&D. This generates an environmental Kuznets curve (EKC) on which pollution first aggravates and then alleviates.
|Förlag||Helsinki Center of Economic Research|
|ISBN (elektroniskt)||978-952-10-7225-3 |
|Status||Publicerad - 6 jun 2012|
|MoE-publikationstyp||C1 Separata vetenskapliga böcker|
|Namn||Economics Discussion Paper |