Resource Use When Demand is Interdependent Over Time

R. Manning

The Economic Record, 1978, vol. 54, issue 1, 72-77

Abstract: Optimal consumption programmes are characterized for a naturally renewable, and a non‐renewable, resource when a parameter determining instantaneous utility depends on cumulated past consumption. Unlike conventional results, optimal consumption may increase over time. Conditions for this are given. For both types of resource it is shown that a free good is not necessarily consumed to the limit of availability, even though non‐satiation appears to hold. Each problem may be interpreted to be about the use of a poluting resource (like uranium), and it then reflects basic physical laws.

Date: 1978
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