Escaping Lock-in:The Scope for a Transition Towards Sustainable Growth?
Date
01.01.2002
01.01.2002
Authors
Reyer Gerlagh, Marjan W. Hofkes
JEL Code
O41
O41
Keywords:
Endogenous growth,lock-in,transition,convergent expectations
Endogenous growth,lock-in,transition,convergent expectations
Publisher
Economy and Society
Economy and Society
Editor
Gianmarco I.P. Ottaviano
Gianmarco I.P. Ottaviano
In this paper we develop a simple endogenous growth model with two competing production technologies and learning spillover effects between firms that use the same technology. Investments are directed to the technology with highest current and expected returns. Since current investments increase future returns through learning, the economy will usually lock in, that is specialise in one of the two technologies. In case the economy has selected a relative polluting technology, sustainable growth requires a transition towards the clean technology. We analyse the scope for (environmental) policies that induce such a transition.