Policy Rules for Exploitation of Renewable Resources: A Macroeconomic Perspective

Posted: 9 Dec 1996

See all articles by Tryggvi Thor Herbertsson

Tryggvi Thor Herbertsson

University of Reykjavik

Anders Sorensen

Copenhagen Business School - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 12, 1996

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 are 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.

JEL Classification: O11, O41, Q20, Q28

Suggested Citation

Herbertsson, Tryggvi Thor and Sorensen, Anders, Policy Rules for Exploitation of Renewable Resources: A Macroeconomic Perspective (August 12, 1996). Available at SSRN: https://ssrn.com/abstract=3581

Tryggvi Thor Herbertsson (Contact Author)

University of Reykjavik ( email )

Reykjavik
Iceland
+354 8613162 (Phone)

HOME PAGE: http://www.ru.is

Anders Sorensen

Copenhagen Business School - Department of Economics ( email )

Porcelaenshaven 16A
DK-2000 Frederiksberg
Denmark
+45 3815 3493 (Phone)
+45 3815 2576 (Fax)

HOME PAGE: http://www.cbs.dk/en/staff/aseco

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