 How could the non-sustainable Easter Island have been sustained?C.Y. Cyrus Chu, Ching-chong Lai and Chih-Hsing Liao International Review of Economics & Finance, 2014, vol. 34, issue C, 161-174 Abstract: The collapsing scenario of Easter Island has been analyzed by Brander and Taylor (1998) as a predator–prey model in a Malthusian world, in which the household is only concerned with its instantaneous utility. This paper develops an endogenous growth model with a renewable resource and analyzes the possibly non-sustainable growth as a steady state, in spite of the household being deeply concerned with all its future lifetime utility. Our analysis shows that the ignorance of future lifetimes in present decision-making is indeed crucial to economic non-sustainability. We then examine whether a deforestation tax set by the government could have reduced the resource exploration rate and thereby held back the economic collapse. We also demonstrate using phase-diagrams how such a tax can switch the economic dynamics from non-sustainability to sustainability. Keywords: Endogenous growth; Environmental policy; Renewable resources (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:34:y:2014:i:c:p:161-174 DOI: 10.1016/j.iref.2014.08.007 Access Statistics for this article International Review of Economics & Finance is currently edited by H. Beladi and C. Chen More articles in International Review of Economics & Finance from Elsevier |
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