Dynamic Aspects of Environmental Damage in a Multisector Economy

The paper contains an analysis of dynamic aspects of environmental damage in an open multisector economy, where the factor intensity and the pollution intensity of each sector are different, and the stock of pollutants is assumed to affect adversely the total amount of one production factor. The paper clarifies the role of substitution relationships among production sectors as well as production factors in enlarging environmental damages as the consequence of the intertemporal maximization of gross regional product.