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Policy Rules for Exploitation of Renewable Resources: A Macroeconomic Perspective

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  • Anders Sørensen

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  • Tryggvi Herbertsson

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

Suggested Citation

  • Anders Sørensen & Tryggvi Herbertsson, 1998. "Policy Rules for Exploitation of Renewable Resources: A Macroeconomic Perspective," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(1), pages 53-76, July.
  • Handle: RePEc:kap:enreec:v:12:y:1998:i:1:p:53-76
    DOI: 10.1023/A:1008259930251
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    References listed on IDEAS

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    1. Fair, Ray C & Taylor, John B, 1983. "Solution and Maximum Likelihood Estimation of Dynamic Nonlinear Rational Expectations Models," Econometrica, Econometric Society, vol. 51(4), pages 1169-1185, July.
    2. Chichilnisky, Graciela, 1994. "Property rights and the dynamics of renewable resources in North-South trade, Chapter 1," MPRA Paper 8513, University Library of Munich, Germany.
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    Cited by:

    1. Herbertsson, Tryggvi Thor, 2003. "Accounting for human capital externalities with an application to the Nordic countries," European Economic Review, Elsevier, vol. 47(3), pages 553-567, June.

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