A consumption-based theory of the environmental Kuznets curve

Most theories about the inverted-U relationship between pollution and incom e, termed the environmental Kuznets curve (EKC), are production-side theori es emphasizing pollution and abatement technologies. Production-side theori es are implicitly based on the assumption of low factor mobility, and the a bsence of pollution as a variable in the utility function. Both assumptions are called into question by the empirical evidence of EKCs for (i) polluta nts that are long-lived and not easily shiftable and (ii) regional cross-se ctions with free labor mobility. Hazardous waste sites are a prime example. This paper develops a stylized model of the EKC based on perfect mobility of households and labor. It represents the first attempt at developing a co nsumption-side model of the EKC. (C) 2001 Elsevier Science B.V. All rights reserved.