We advance an original assumption whereby a good state of the environment positively affects labor productivity in R&D such that deteriorating environmental quality negatively impacts R&D. We study the implications of this assumption for the optimal solution in an R&D-based model of growth,...

Environmental policy affects the distribution of market shares if intermediate goods are differentiated in their pollution intensity. When innovations are environment-friendly, a tax on emissions skews demand towards new goods which are the most productive. In this case, the tax has to increase...

We show that the social desirability of a resource substitute systematically depends on the pattern of resources—either renewable (RR) or non-renewable (NRR)—involved in the resource substitute development program. Developing a RR in an NRR-based economy is particularly rewarding...