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Linear production function, externalities and indeterminacy in a capital-resource growth model

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Listed author(s):
  • Carboni, Oliviero A.
  • Russu, Paolo

Abstract

This paper investigates the equilibrium growth dynamics of an economy whose production is based on natural resources and which seeks to maximize welfare to the local community. This involves determining the optimal trajectories of consumption in the local area and the use of the environmental resource. Economic dynamics are affected by negative environmental externalities which are explicitly included as unfavourable effects in a linear production function. The analysis shows the existence of local and global indeterminacy.

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File URL: http://www.sciencedirect.com/science/article/pii/S0304406813000293
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Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 49 (2013)
Issue (Month): 5 ()
Pages: 422-428

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Handle: RePEc:eee:mateco:v:49:y:2013:i:5:p:422-428
DOI: 10.1016/j.jmateco.2013.04.002
Contact details of provider: Web page: http://www.elsevier.com/locate/jmateco

Keywords: Global and local indeterminacy; Environmental externalities; Open-access natural resources;

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Cited by:

  1. Chaudhry, Azam & Tanveer, Hafsa & Naz, R., 2017. "Unique and multiple equilibria in a macroeconomic model with environmental quality: An analysis of local stability," Economic Modelling, Elsevier, vol. 63(C), pages 206-214.
  2. OA Carboni & P. Russu, 2012. "Global Indeterminacy in a Tourism Sector Model," Working Paper CRENoS 201230, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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