Title: Polluting non-renewable resources, tradeable permits and endogenous growth

Authors: Andre Grimaud, Luc Rouge

Addresses: GREMAQ, IDEI and LERNA, University of Toulouse, 21, allee de Brienne, 31000 Toulouse, France; Groupe ESC Toulouse, France. ' Groupe de Finance, Groupe ESC Toulouse, France

Abstract: We set up an endogenous growth model with vertical innovations in which the use of a non-renewable resource within the production process generates a flow of pollution. This flow negatively affects the dynamics of the stock of environment, which is an argument of the non-separable utility function. We study the general equilibrium effects of an environmental policy consisting in emissions of tradeable permits. In particular, we show that a more stringent policy can lead, by the channel of the permits price dynamics, to more R&D; in all cases it promotes growth.

Keywords: endogenous growth; environmental policy; non-renewable resources; non-separable utility function; pollution; tradeable permits; vertical innovation; growth; natural resources; environment.

DOI: 10.1504/IJGENVI.2004.005283

International Journal of Global Environmental Issues, 2004 Vol.4 No.1/2/3, pp.38 - 57

Published online: 19 Sep 2004 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article