Policy Rules for Exploitation of Renewable Resources: A Macroeconomic Perspective

Anders Sørensen and Tryggvi Herbertsson ()

Environmental & Resource Economics, 1998, vol. 12, issue 1, 53-76

Abstract: A fundamental problem for an economy based on a common property resource is the absence of a market to trade the resource. This implies that private costs will be below social costs. This paper investigates possible government interventions that correct for such distortions in a neoclassical growth model with a production externality in harvesting. The model predicts that the welfare of the representative household increases considerably when a Piguovian tax is implemented. The policy that replicates the command optimum is highly complex and changes over time. On the other hand, a large share of the maximum welfare increase is internalized by introducing a constant quantity tax, suggesting that the potential of such policies is high. Copyright Kluwer Academic Publishers 1998

Keywords: resource based growth; resource rent; problem of the commons (search for similar items in EconPapers)
Date: 1998
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DOI: 10.1023/A:1008259930251

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