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Optimal Regulation And Growth In A Natural-Resource-Based Economy

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Author Info
José Ramón Ruiz Tamarit (Universitat de València)
Manuel Sánchez Moreno (Universitat de València)

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Abstract

This paper develops a two-sector model for a renewable natural resource based economy. Pareto efficient results show the optimal harvesting rate that allows for sustained long-run optimal growth, which is upper-bounded by the biological rate of reproduction. Regulation prevents from resource over-exploitation and exhaustion which arise under open access. The Ramsey policy allowing the competitive economy to reach the first-best solution, leads the government to tax harvesting activity from firms and distribute the receipts among households. In the short-run the tax is variable. In the long-run, the lower the intrinsic rate of reproduction the higher the constant unit tax on the resource use.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2006-21.pdf
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File Function: Fisrt version / Primera version, 2006
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Publisher Info
Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2006-21.

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Length: 36 pages
Date of creation: Nov 2006
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Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2006-21

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Related research
Keywords: Natural Resources; Efficiency; Open Access; Ramsey Regulation; Growth.;

Find related papers by JEL classification:
C62 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Existence and Stability Conditions of Equilibrium
D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
H2 - Public Economics - - Taxation, Subsidies, and Revenue

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