In this paper we provide a theoretical foundation for the Porter hypothesis in a context of quality competition. We use a duopoly model of vertical product differentiation where firms simultaneously choose the environmental quality of the good they produce (which can be either high or low) and, afterwards, engage in price competition. In this simple setting, we show that a Nash equilibrium of the game with low quality could be Pareto dominated by another strategy profile in which both firms produce the high environmental quality good.We then show how, in this case, the introduction of a penalty to any firm that produces the low environmental quality can result in an increase in both firms' profits. The impact of the policy on consumers depends on the effect of a quality shift on the cost structure of firms.JEL classification: L13, L51, Q55, Q58.

While fossil energy dependency has declined and energy supply has grown in the postwar world economy, future resource scarcity could cast its shadow on world economic growth soon if energy markets are forward looking. We develop an endogenous growth model that reconciles the current aggregate trends in energy use and productivity growth with the intertemporal dynamics of forward looking resource markets. Combining scarcity-rent driven energy supply (in the spirit of Hotelling) with profit-driven Directed Technical Change (in the spirit of Romer/Acemoglu), we generate transitional dynamics that can be qualitatively calibrated to current trends. The long-run properties of the model are studied to examine whether current trends are sustainable. We highlight the role of extraction costs in mining.

No abstract

No abstract

No abstract

No abstract

No abstract

The economic policy needs to pay increasingly more attention to the environmental issues, which requires the development of methodologies able to incorporate environmental, as well as macroeconomic, goals in the design of public policies. Starting from this observation, this article proposes a methodology based upon a Simonian satisficing logic made operational with the help of goal programming (GP) models, to address the joint design of macroeconomic and environmental policies. The methodology is applied to the Spanish economy, where a joint policy is elicited, taking into consideration macroeconomic goals (economic growth, inflation, unemployment, public deficit) and environmental goals (CO(2), NO( x ) and SO( x ) emissions) within the context of a computable general equilibrium model. The results show how the government can "fine-tune" its policy according to different criteria using GP models. The resulting policies aggregate the environmental and the economic goals in different ways: maximum aggregate performance, maximum balance and a lexicographic hierarchy of the goals.