Evolutionary Economics and Environmental Policy

Evolutionary Economics and Environmental Policy

Survival of the Greenest

New Horizons in Institutional and Evolutionary Economics series

Jeroen C.J.M. van den Bergh, Albert Faber, Annemarth M. Idenburg and Frans H. Oosterhuis

This study offers a unique evolutionary economics perspective on energy and innovation policies in the wider context of the transition to sustainable development.

Chapter 2: Evolutionary Economics

Jeroen C.J.M. van den Bergh, Albert Faber, Annemarth M. Idenburg and Frans H. Oosterhuis

Subjects: economics and finance, environmental economics, evolutionary economics, environment, environmental economics


EVOLUTIONARY THINKING Evolution is nowadays widely regarded as both a general concept and a set of concrete mechanisms to comprehend structural change processes that affect human technologies, organizations and institutions (e.g. Ayres, 1994; Dennett, 1995). The application of evolutionary thinking to economics has made significant headway during the past 20 years. This is partly the result of dissatisfaction with the way technological development is presented in the neoclassical economic model of economic growth. Technology was originally viewed as an exogenous variable that develops outside the economic process. Later it came to be viewed as an endogenous variable that could be fitted rather easily into the framework of economic equilibrium analysis. More recent insights into the process of innovation, however, undermine this latter assumption. Technological development is now viewed as the outcome of a continuous interaction between generation (innovation) and selection of diversity in technologies and organizational structures. When we take this view as a starting point, the evolutionary approach provides a credible alternative to traditional theories of economic and technological change. The rational behaviour of individual persons and groups, which is assumed in traditional economic theory, is replaced in the evolutionary approach by bounded rationality, which can take the form of habits, routines, myopia and imitation (Nelson and Winter, 1982; Robson, 2001). The following elements and processes play key and complementary roles within evolutionary economics: ● ● ● ● ● Diversity (variation): populations of strategies, products, technologies and organizational structures. Selection: processes that reduce existing diversity. Innovation: processes that create more (increase) diversity....

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