Equilibrium Resource Management with Altruistic Overlapping Generations

32 Pages Posted: 26 Jul 2013

See all articles by Ivar Ekeland

Ivar Ekeland

University of British Columbia (UBC) - Faculty of Education; Université Paris Dauphine - CEREMADE

Larry S. Karp

University of California, Berkeley

Rashid Sumaila

University of British Columbia (UBC)

Date Written: July 9, 2013

Abstract

We imbed a classic fishery model, where the optimal policy follows a Most Rapid Approach Path to a steady state, into an overlapping generations setting. The current generation discounts future generations' utility flows at a rate possibly different from the pure rate of time preference used to discount their own utility flows. The resulting model has non-constant discount rates, leading to time inconsistency. The unique Markov Perfect equilibrium to this model has a striking feature: provided that the current generation has some concern for the not-yet born, the equilibrium policy does not depend on the degree of that concern.

Keywords: overlapping generations, time inconsistency, hyperbolic discounting, Markov perfect, renewable resources

JEL Classification: C73, D64, D90, Q01, Q22, C61

Suggested Citation

Ekeland, Ivar and Karp, Larry S. and Sumaila, Rashid, Equilibrium Resource Management with Altruistic Overlapping Generations (July 9, 2013). Available at SSRN: https://ssrn.com/abstract=2298172 or http://dx.doi.org/10.2139/ssrn.2298172

Ivar Ekeland

University of British Columbia (UBC) - Faculty of Education ( email )

Université Paris Dauphine - CEREMADE ( email )

Place du Marechal de Lattre de Tassigny
Paris Cedex 16, 75775
France

Larry S. Karp (Contact Author)

University of California, Berkeley ( email )

Dept. of Agriculture & Resource Economics
313 Giannini Hall
Berkeley, CA 94720
United States
510-643-8911 (Fax)

Rashid Sumaila

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4
Canada

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