The collapsing scenario of Easter Island has been analyzed by Brander and Taylor (1998) as a predator prey model in a Malthusian world, in which the household is only concerned with its instantaneous utility. This paper develops an endogenous growth model with a renewable resource and analyzes the possibly non-sustainable growth as a steady state, in spite of the household being deeply concerned with all its future lifetime utility. Our analysis shows that the ignorance of future lifetimes in present decision-making is indeed crucial to economic non-sustainability. We then examine whether a deforestation tax set by the government could have reduced the resource exploration rate and thereby held back the economic collapse. We also demonstrate using phase-diagrams how such a tax can switch the economic dynamics from non-sustainability to sustainability. (C) 2014 Elsevier Inc. All rights reserved.
關聯:
INTERNATIONAL REVIEW OF ECONOMICS & FINANCE Volume: 34 Pages: 161-174
