Environmental and Resource Management Under Myopia

SMU Economics and Statistics Working Paper No. 26-2006

36 Pages Posted: 19 Dec 2006

See all articles by Tomoki Fujii

Tomoki Fujii

Singapore Management University - School of Economics

Date Written: December 2006

Abstract

Myopia is important in environmental and resource management problems because they often involve intertemporal decisions over a long time horizon. We present a parsimonious extension of a standard dynamic programming equation in a continuous time and continuous state setting, which enables rich description of myopic behavior. In our model, the process of planning future controls and choosing current control are clearly distinguished. We illustrate the behavior of various types of myopic agents with a simple example of non-renewable resource extraction, and discuss the policy relevance of the expiry of extraction permits to resource management under myopia.

Keywords: non-constant discounting, resource management, myopia, time-consistency, observational equivalence

JEL Classification: C61, Q30, Q50

Suggested Citation

Fujii, Tomoki, Environmental and Resource Management Under Myopia (December 2006). SMU Economics and Statistics Working Paper No. 26-2006. Available at SSRN: https://ssrn.com/abstract=952293 or http://dx.doi.org/10.2139/ssrn.952293

Tomoki Fujii (Contact Author)

Singapore Management University - School of Economics ( email )

90 Stamford Road
178903
Singapore
+6568280279 (Phone)
+6568280833 (Fax)

HOME PAGE: http://www.mysmu.edu/faculty/tfujii/

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