How could the non-sustainable Easter Island have been sustained?

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Title:	How could the non-sustainable Easter Island have been sustained?
Authors:	Chu, C.Y.Cyrus Lai, Ching-Chong Liao, Chih-Hsing
Contributors:	經濟系
Keywords:	Endogenous growth Environmental policy Renewable resources
Date:	2014-11
Issue Date:	2015-01-19 14:55:50 (UTC+8)
Abstract:	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.
Relation:	INTERNATIONAL REVIEW OF ECONOMICS & FINANCE Volume: 34 Pages: 161-174
Appears in Collections:	[Department of Economics & Graduate Institute of Economics ] journal articles

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