Importance of abatement technology for achieving sustainable development: a numerical investigation

Abstract In endogenous growth models that focus on and implement various aspects of the natural environment, it has been shown that environmental taxation often leads to corresponding improvements in economic conditions, including welfare, as well as environmental improvements. Nevertheless, it is easy to imagine that raising taxes for the purposes of environmental preservation could be a burden for private firms and, eventually, its impact would extend to individual households. This paper presents one possible proposal that would preserve the aforementioned benefits while maintaining a lower tax burden. Its relevance is demonstrated through an extended numerical analysis of an existing study that examines the development of abatement technologies in the framework of R&D-based growth. Specifically, we focus on trends in two economic variables, the rates of economic growth and economic welfare, and two environmental variables, pollution emission levels and environmental quality.