<p>For example, if the consumption of goods with negative externalities of consumption were reduced to the socially optimum amount, thus eliminating the social welfare loss, would that directly cause economic growth?</p>

CC BY-SA 3.0
2017-02-26T21:29:30.700Z
How would you define "economic growth"? It increases welfare, decreases consumption of that particular good. Not all metrics increase.
Giskard
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2017-02-27T16:14:05.167Z
With economic growth I mean an increase in the output of the economy.
ILoveJesus
CC BY-SA 3.0
2017-02-27T16:56:37.837Z
Given the data available in your question (you talk about a single good and its consumption decreases) the answer to that is trivial, isn't it?
Giskard
CC BY-SA 3.0
2017-02-27T21:23:04.173Z
To answer this question I think you have to make a clear set of assumptions. 1. One type of externality: pollution. 2. Market type: Oligopolistic Competition.
3. One good: cars.
4. One country: USA Now let's think about how to solve this problem: given a decrease in pollution from cars, does the output (RGDP) of the country increase holding everything else equal? I'll do some research on this and post my results here when I have them! If anyone wants to try this research with a different set of assumptions that would make a great addition to the discussion.
Sean Lambert
CC BY-SA 3.0
2017-02-27T23:43:45.573Z
Maybe you are assuming that the externality affects the workers' productivity ?
user11629
<macroeconomics><microeconomics>
Does a social welfare gain cause economic growth?
ILoveJesus
# Does a social welfare gain cause economic growth?

(Asked by: username_0 on 2017-02-26)

For example, if the consumption of goods with negative externalities of consumption were reduced to the socially optimum amount, thus eliminating the social welfare loss, would that directly cause economic growth?

**Tags:** macroeconomics, microeconomics
> **Comments:**
> **username_1**: How would you define "economic growth"? It increases welfare, decreases consumption of that particular good. Not all metrics increase.  
> **username_0**: With economic growth I mean an increase in the output of the economy.  
> **username_1**: Given the data available in your question (you talk about a single good and its consumption decreases) the answer to that is trivial, isn't it?  
> **username_2**: To answer this question I think you have to make a clear set of assumptions. 1. One type of externality: pollution. 2. Market type: Oligopolistic Competition. 3. One good: cars. 4. One country: USA Now let's think about how to solve this problem: given a decrease in pollution from cars, does the output (RGDP) of the country increase holding everything else equal? I'll do some research on this and post my results here when I have them! If anyone wants to try this research with a different set of assumptions that would make a great addition to the discussion.  
> **username_3**: Maybe you are assuming that the externality affects the workers' productivity ?  

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## 0 answers

