Endogenous Growth and Negative Exernalities

Univ. of Siena, Dept. of Econ. Working Paper No. 270

26 Pages Posted: 21 May 2000

See all articles by Stefano Bartolini

Stefano Bartolini

University of Siena - Department of Economics

Luigi Bonatti

University of Bergamo; University of Trento - Department of Economics and Management

Date Written: November 1999

Abstract

In this paper, the expansion of private production erodes the quality of commonly owned goods, thereby forcing individuals to rely increasingly on private goods to satisfy their needs. In the face of this deterioration, households keep their labor supplies and saving rates relatively high in spite of their increasing private wealth. By so doing, each household contributes to an increase in production and thus has a detrimental -- though negligible -- impact on commonly owned goods. Perpetual growth is the outcome of this self-fueling process. Since long-run growth results from a coordination failure, it may be higher than socially desirable.

Keywords: common property, defensive expenditure, coordination failure, undesirable growth, environmental assets, social assets, substitution process, self-fueling process

JEL Classification: O40, Q20

Suggested Citation

Bartolini, Stefano and Bonatti, Luigi, Endogenous Growth and Negative Exernalities (November 1999). Univ. of Siena, Dept. of Econ. Working Paper No. 270, Available at SSRN: https://ssrn.com/abstract=200493 or http://dx.doi.org/10.2139/ssrn.200493

Stefano Bartolini (Contact Author)

University of Siena - Department of Economics ( email )

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Luigi Bonatti

University of Bergamo ( email )

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University of Trento - Department of Economics and Management ( email )

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+04 61 882222 (Fax)

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