The simple analytics of the environmental Kuznets curve

Evidence suggests that some pollutants follow an inverse-U-shaped pattern relative to countries' incomes, a relationship that has been called an 'environmental Kuznets curve'. We present a simple and straight-forward static model of the microfoundations of this relationship, in which the curve depends on increasing returns in the technological link between consumption of a desired good and abatement of its undesirable byproduct. The curve does not depend on the dynamics of growth, political institutions, or even externalities, and can be consistent with market failure or efficiency. We conclude by presenting empirical support for increasing returns to abating some common air pollutants. (C) 2001 Elsevier Science B.V. All rights reserved.