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Preservation and exogenous uncertain future preferences

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  • Alain Ayong Le Kama

    () (Commissariat général du Plan and EUREQua, Université de Paris I, Maison des Sciences Economiques, 106-112 bd de l'Hôpital, 75647 Paris Cedex 13, FRANCE)

Abstract

We extend the Beltratti, Chichilnisky and Heal's (1993) and (1998) continuous-time stochastic dynamic framework to analyze the optimal depletion of an asset whose consumption is irreversible, in the face of uncertainty about future preferences. Their model is rather general and so the results are general qualitative theorems. We show that in some interesting cases it is possible to solve their model analytically. The cases involve constant elasticity utility functions and the assumption of a Poisson process for the evolution of preferences.

Suggested Citation

  • Alain Ayong Le Kama, 2001. "Preservation and exogenous uncertain future preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(3), pages 745-752.
  • Handle: RePEc:spr:joecth:v:18:y:2001:i:3:p:745-752
    Note: Received: September 13, 1999; revised version: November 23, 1999
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    References listed on IDEAS

    as
    1. Alain Le Kama & Katheline Schubert, 2004. "Growth, Environment and Uncertain Future Preferences," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(1), pages 31-53, May.
    2. Alain Ayong Le Kama, 2001. "Preservation and exogenous uncertain future preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(3), pages 745-752.
    3. Maria Cunha-E-Sá & Clara Costa-Duarte, 2000. "Endogenous Future Preferences and Conservation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 16(2), pages 253-262, June.
    4. Le Kama, Alain Ayong & Schubert, Katheline, 2007. "A Note On The Consequences Of An Endogenous Discounting Depending On The Environmental Quality," Macroeconomic Dynamics, Cambridge University Press, vol. 11(02), pages 272-289, April.
    5. Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1998. "Uncertain future preferences and conservation," MPRA Paper 7912, University Library of Munich, Germany.
    6. Obstfeld, Maurice, 1990. "Intertemporal dependence, impatience, and dynamics," Journal of Monetary Economics, Elsevier, vol. 26(1), pages 45-75, August.
    7. Epstein, Larry G., 1987. "A simple dynamic general equilibrium model," Journal of Economic Theory, Elsevier, vol. 41(1), pages 68-95, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Alain Le Kama & Katheline Schubert, 2004. "Growth, Environment and Uncertain Future Preferences," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(1), pages 31-53, May.
    2. Alain Ayong Le Kama & Mouez Fodha, 2009. "Stockage des déchets radioactifs et incertitude," Économie et Prévision, Programme National Persée, vol. 190(4), pages 39-52.
    3. Frank Krysiak, 2009. "Sustainability and its relation to efficiency under uncertainty," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(2), pages 297-315, November.
    4. Donatella Baiardi & Mario Menegatti, 2011. "Pigouvian tax, abatement policies and uncertainty on the environment," Journal of Economics, Springer, vol. 103(3), pages 221-251, July.
    5. Svenja Hector(), "undated". "Accounting for Different Uncertainties: Implications for Climate Investments?," Working Papers ETH-RC-13-007, ETH Zurich, Chair of Systems Design.
    6. Alain Ayong Le Kama & Aude Pommeret & Fabien Prieur, 2014. "Optimal Emission Policy under the Risk of Irreversible Pollution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(6), pages 959-980, December.
    7. Alain AYONG LE KAMA, 2004. "La consommation de ressources environnementales en incertitude," Discussion Papers (REL - Recherches Economiques de Louvain) 2004031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. repec:hal:journl:halshs-00348869 is not listed on IDEAS
    9. Alain Ayong Le Kama, 2001. "Preservation and exogenous uncertain future preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(3), pages 745-752.
    10. Svenja Hector, 2013. "Accounting for Different Uncertainties: Implications for Climate Investments?," Working Papers 2013.107, Fondazione Eni Enrico Mattei.
    11. Ayong Le Kama, Alain & Fodha, Mouez & Lafforgue, Gilles, 2009. "Optimal Carbon Capture and Storage Policies," TSE Working Papers 09-095, Toulouse School of Economics (TSE).
    12. El Hadji Fall, 2006. "The Worst-Case Scenario and Discounting the Very Long Term," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00084074, HAL.
    13. Nkuiya, Bruno & Costello, Christopher, 2016. "Pollution control under a possible future shift in environmental preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PB), pages 193-205.
    14. Frank Krysiak, 2009. "Risk Management as a Tool for Sustainability," Journal of Business Ethics, Springer, vol. 85(3), pages 483-492, April.
    15. Loek Groot, 2004. "La consommation de ressources environnementales en incertitude," Recherches économiques de Louvain, De Boeck Université, vol. 70(3), pages 255-286.
    16. Higashi, Youichiro & Hyogo, Kazuya & Takeoka, Norio, 2014. "Stochastic endogenous time preference," Journal of Mathematical Economics, Elsevier, vol. 51(C), pages 77-92.

    More about this item

    Keywords

    Preservation of natural resources; Uncertainty; Preferences.;

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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