Industry segmentation under environmental pressure: an optimal approach

• Main Authors: Feng Dai, Jingxu Liu, Ling Liang
• Format: Article
• Language: English
• Published: Vilnius Gediminas Technical University 2014-01-01
• Series: Technological and Economic Development of Economy
• Subjects: economic growth; environmental pressure; industry segmentation; optimal structure; competitive relation
• Online Access: https://journals.vgtu.lt/index.php/TEDE/article/view/4342

Based on the Solow growth model, this paper builds a combinatorial model for economic growth under environmental pressure. Using the model, the optimal number of industries in an economy can be computed, and the “optimal number” can be regarded as a criterion for decision making concerning industry segmentation. This paper presents a critical value of the number of industries in an economy, which determines the economic output to grow (or not) after industry segmentation. The findings include the following: (1) technological progress and innovative growth cause an industry segmentation, and (2) industry segmentation is the primary approach to sustaining economic growth under environmental pressure.