Escaping Lock-In: The Scope for a Transition Towards Sustainable Growth?
33 Pages Posted: 21 Mar 2002
Date Written: January 2002
Abstract
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. expectations
Keywords: Endogenous growth, lock-in, transition, convergent
JEL Classification: O41
Suggested Citation: Suggested Citation
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