Environmental Protection and Economic Growth: An Optimal Pollution Controlling Model

Environmental protection against pollution has become a common issue faced by the whole world. In the case of the international cooperation on controlling the environmental pollution, the developing and developed countries have different understanding on the principle of “common but differentiated responsibilities”. This paper has set up an optimal pollution controlling model for the developing and developed countries to incorporate environmental protection and economic growth. Based on a dynamic differential game, we find that the increasing environmental expenditure of developed countries in the initial stage of the economic growth path of the developing country can stimulate more international cooperation on pollution controlling. The developing and developed countries can control the environment pollution without significant loss of social welfare.