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Intergenerational transfers, lifetime welfare, and resource preservation

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  • VALENTE, SIMONE

Abstract

This paper analyzes overlapping-generations models where natural capital is owned by selfish agents. Transfers in favor of young agents reduce the rate of depletion and increase output growth. It is shown that intergenerational transfers may be preferred to laissez-faire by an indefinite sequence of generations: if the resource share in production is sufficiently high, the welfare gain induced by preser- vation compensates for the loss due to taxation. This conclusion is reinforced when other assets are available, e.g. man-made capital, claims on monopoly rents, and R&D investment. Transfers raise the welfare of all generations, except that of the first resource owner: if resource endowments are taxed at time zero, all successive generations support resource-saving policies for purely selfish reasons.

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Bibliographic Info

Article provided by Cambridge University Press in its journal Environment and Development Economics.

Volume (Year): 13 (2008)
Issue (Month): 01 (February)
Pages: 53-78

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Handle: RePEc:cup:endeec:v:13:y:2008:i:01:p:53-78_00

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Cited by:
  1. Valente, Simone, 2011. "Intergenerational externalities, sustainability and welfare—The ambiguous effect of optimal policies on resource depletion," Resource and Energy Economics, Elsevier, Elsevier, vol. 33(4), pages 995-1014.
  2. Birgit Bednar–Friedl & Karl Farmer, 2014. "Existence and efficiency of stationary states in a renewable resource based OLG model with different harvest costs," Graz Economics Papers, University of Graz, Department of Economics 2014-07, University of Graz, Department of Economics.
  3. Simone Valente, 2007. "Human Capital, Resource Constraints and Intergenerational Fairness," CER-ETH Economics working paper series, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich 07/68, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  4. Valente, Simone, 2011. "Habit formation and resource dependence in dynastic economies," Mathematical Social Sciences, Elsevier, Elsevier, vol. 61(3), pages 131-145, May.

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