Technological vs ecological switch and the environmental Kuznets curve

Raouf Boucekkine (1) , Aude Pommeret (2, 3) , Fabien Prieur (4)

1 GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille
2 IREGE - Institut de Recherche en Gestion et en Economie
3 HEC Lausanne - Faculté des Hautes Etudes Commerciales (HEC Lausanne)
4 LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée

We consider an optimal technology adoption AK model in line with Boucekkine Krawczyk and Vallée (2011): an economy, caring about consumption and pollution as well, starts with a given technological regime and may decide to switch at any moment to a cleaner technology at a given permanent or transitory output cost. At the same time, we posit that there exists a pollution threshold above which the assimilation capacity of Nature goes down, featuring a kind of irreversible ecological regime. We study how ecological irreversibility interacts with the ingredients of the latter optimal technological switch problem, with a special attention to induced capital-pollution relationship. We find that if a single technological switch is optimal, one recovers the Environmental Kuznets Curve provided initial pollution is high enough. If exceeding the ecological threshold is optimal, then the latter configuration is far from being the rule.

Mots clés: Technology adoption; ecological irreversibility; Environmental Kuznets Curve; Multi-stage optimal control

Domaines: Economies et finances

Raouf Boucekkine, Aude Pommeret, Fabien Prieur. Technological vs ecological switch and the environmental Kuznets curve. 2011. ⟨halshs-00633024⟩