Linear production function, externalities and indeterminacy in a capital-resource growth model
|Title||Linear production function, externalities and indeterminacy in a capital-resource growth model|
|Publication Type||Journal Article|
|Year of Publication||2013|
|Authors||Carboni, OA, Russu, P|
|Journal||Journal of Mathematical Economics|
This paper investigates the equilibrium growth dynamics of an economy whose production is based on natural resources and which seeks to maximize welfare to the local community. This involves determining the optimal trajectories of consumption in the local area and the use of the environmental resource. Economic dynamics are affected by negative environmental externalities which are explicitly included as unfavourable effects in a linear production function. The analysis shows the existence of local and global indeterminacy.
|Keywords||environmental externalities, global and local indeterminacy, open-access natural resources|