EconPapers    
Economics at your fingertips  
 

Sustainable endogenous growth model of multiple regions: Reconciling OR and economic perspectives

Tao Wu, Ning Zhang, Lin Gui and Wenjie Wu
Authors registered in the RePEc Author Service: 武文杰

European Journal of Operational Research, 2018, vol. 269, issue 1, 218-226

Abstract: By combining the two-sector endogenous growth model and the dynamic game of remediation (utilization) activities, we propose a theoretical framework to investigate conflict in the sustainable growth path of multiple regions. We analyze the effects of two types of activities that differ in externalities on other regions’ stock of natural resources. In the case of inclusive remediation with a positive externality, the region that moves firstly will pass all the remediation responsibility to the other region and enjoy faster growth. However, in the case of exclusive utilization with a negative externality, both regions will experience the same growth rate, because each region could adopt exclusive utilization and reduce the stock of common resources available to the other region in the next period, which result in a symmetric equilibrium. We also find that regions have a stronger incentive to implement exclusive utilization than inclusive remediation. Although exclusive utilization seems fair to regions, it may deteriorate the social welfare, because regions may fall into a ‘prisoner's dilemma’ by using exclusive utilization. Three extensions of the model (i.e., increasing number of regions, asymmetric regions, and knowledge as a public capital good) are provided.

Keywords: Economics; Endogenous economic growth; OR approach; Renewable natural resources; Inclusive remediation; Exclusive utilization; Externality (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221717309530
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:269:y:2018:i:1:p:218-226

DOI: 10.1016/j.ejor.2017.10.040

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:ejores:v:269:y:2018:i:1:p:218-226