This paper presents an
alternative view to the cause and size of market failures. The work here
suggest that the size of the market failure is not man made per se but rather
given a full set of initial conditions it is endogenous to the dynamical forces
at play. It is shown that the level and variance of market failures is tied to
the location of the steady state (i.e.
level of development). The paper finds that only changes to the location of the
steady state produces changes to the potential level of the market failure.
This paper adds to the increasing body of literature the notion that institutional
change is not a sufficient condition to sustained economic development.
With the purpose of studying the
influence of population dynamics and economic growth on energy consumption and
carbon emissions, an endogenous economic growth model is proposed incorporating
physical and human capital and using an Agent-Based Model. The model can test
different development strategies by identifying the key factors existing at the
agent level that may speed up or slow down a given path, and therefore it is an
interesting tool to develop and to test mitigation and/or adaptation measures.
Favorable scenarios may be possible in societies that encourage investment in
human capital through education and technological development, provided that
this is accompanied by a reduction in consumption rates and the creation of
physical capital by the population. Moreover, this model shows that human
capital resulting from education not only raises productivity, but also plays a
key role in the development and adoption of new technologies that drive