While there is strong consensus at the conceptual level about sustainable development there are few formal models that outline the conditions for environmentally steady and sustainable growth in a decentralized market economy. Addresses this issue by building a Green GNP model and then deriving a single long‐run condition for environmentally steady and sustainable growth. Examines the relationship between industrial affluence and environmental decay. If industrial affluence comes from the lower elasticity of substitution among goods, it does not necessarily cause environmental decay. Finding that substitutability still plays an important role in environmentally steady and sustainable growth and concludes that public policy makers should pay more attention to the relationship between substitutability among goods and environmental sustainability.
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