Impact of the Environmental Externalities and Technological Progress on the Stability of Economic System Development on the Example of the Ingulets River Basin

Abstract

Our study demonstrates the introduction of a market-based mechanism for environmental management in conditions of a shortage of natural (water) resources. The purpose of this paper is to investigate impact of the environmental externalities and technological progress on the stability of economic system development. We considered model of upstream and downstream firms with production negative externality, suppose producer pollutant and farm enterprise along Ingulets river using experimental data and OLS method. The results of the study and practical recommendations will allow participants of the technological process to respond quickly on changes in the state of the environment and make effective decisions aimed at ensuring the stability of the economic system and environmental safety. We found that enterprise’s rate of technological development inspired by IT implementation has to be 0.28 times more than technological development of pollutant to save stability of farm enterprise’s output.