Directed technical change and environmental quality

We propose a directed technical change model with two sectors, clean and dirty, to analyze the impact of the degree of substitutability between sectors and the degree of scale effects on the environmental quality. The technological knowledge is biased towards the clean sector; i.e., the environmenta...

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Veröffentlicht in:Portuguese economic journal 2021, Vol.20 (1), p.71-97
Hauptverfasser: Afonso, Óscar, Fonseca, Liliana, Magalhães, Manuela, Vasconcelos, Paulo B.
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container_issue 1
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container_title Portuguese economic journal
container_volume 20
creator Afonso, Óscar
Fonseca, Liliana
Magalhães, Manuela
Vasconcelos, Paulo B.
description We propose a directed technical change model with two sectors, clean and dirty, to analyze the impact of the degree of substitutability between sectors and the degree of scale effects on the environmental quality. The technological knowledge is biased towards the clean sector; i.e., the environmental quality is improved whenever the elasticity of substitution between inputs in both sectors increases and, along with that, the economy: (i) is rich in renewable capital, (ii) has higher relative supply of clean labor under scale effects, and (iii) enjoys higher relative R&D productivity in the clean sector. The improvement in the environmental quality benefits the welfare. Moreover, the growth rate is higher in the presence of scale effects.
doi_str_mv 10.1007/s10258-020-00174-4
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subjects Bias
Capital
Econometrics
Economic Policy
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Environmental quality
Growth rate
Microeconomics
Original Article
Productivity
R&D
Research & development
Welfare
title Directed technical change and environmental quality
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