Abstract
We consider an economy comprising two production sectors. A manufactured goods sector emits environmental pollutants during production. The other sector is an agricultural goods sector producing with constant returns to scale. It is used as numeraire. In our model, moreover, it is possible for the firms in the manufactured goods sector to select the production technology of intermediate goods out of two technologies: a “classical technology” with constant returns to scale or “modern technology” with increasing returns to scale. We explain the environmental Kuznets curve, which is described in many empirical studies of environmental economics, by using our theoretical model and show some relations between the technological conversion and the generating factor of the environmental Kuznets curve. Moreover, we consider a case in which a population can move freely between regions and in which this technological conversion affects the population distribution in the long run.
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