Renewable resource and capital with a joy-of-giving resource bequest motive

Thierry Bréchet and Stéphane Lambrecht

Resource and Energy Economics, 2011, vol. 33, issue 4, 981-994

Abstract: In this article we ask whether a privately owned natural renewable resource can be conserved and managed efficiently when households have a joy-of-giving resource bequest motive. We model an overlapping generations economy in which firms have access to a CES production technology combining the natural resource, physical capital and labor. Our results shed light on the interplay between the resource bequest motive and the substitutability/complementarity relationship between capital and the natural resource in the determination of the equilibrium propensity to use the resource. The mere existence of the bequest motive does not guarantee that the resource will be conserved in the long run. When the resource is highly substitutable with capital, the equilibrium actually never exhausts the resource stock whatever the intensity of the bequest motive. When the resource is a poor substitute for capital, the equilibrium preserves the resource only if the taste for bequeathing is strong enough. Be the economy in over-accumulation or in under-accumulation of the natural resource, it always increases aggregate consumption to run the stock of capital at a level lower than the efficiency level.

Keywords: Overlapping generations; Renewable resource; Altruism; General equilibrium (search for similar items in EconPapers)
JEL-codes: E2 O13 Q23 Q5 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: Renewable resource and capital with a joy-of-giving resource bequest motive (2011)
Working Paper: Renewable resource and capital with a joy-of-giving resource bequest motive (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:33:y:2011:i:4:p:981-994

DOI: 10.1016/j.reseneeco.2010.06.003

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