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Undesirable growth in a model with capital accumulation and environmental assets

Published online by Cambridge University Press:  23 December 2002

Stefano Bartolini  and
Luigi Bonatti
Stefano Bartolini
Affiliation:
Dipartimento di Economia Politica, Università di Siena
Luigi Bonatti
Affiliation:
Dipartimento di Economia, Universita di Trento
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Abstract

The expansion of private production erodes the quality of commonly owned assets, thereby forcing individuals to rely increasingly on private goods to satisfy their needs. In the face of this deterioration, households increase their work effort and accumulate more capital in order to buy more consumer goods both in the present and in the future. By so doing, each household contributes to an increase in production and thus has a detrimental—though negligible—impact on commonly owned assets. Hence, the economy converges to a long-run equilibrium level of production that is higher than the level associated with the Pareto-efficient path.

Keywords

Common propertyDefensive expenditureMarket failureUndesirable growthEnvironmental assets
Type
Theory and Applications
Information
Environment and Development Economics , Volume 8 , Issue 1 , February 2003 , pp. 11 - 30
Copyright
© 2003 Cambridge University Press

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Footnotes

A special thank to L. Punzo and A. Leijonhufvud, who encouraged and discussed these ideas since their beginning. Thanks for useful comments also to G. Becattini, L. Bosco, E. Cresta, M. Dardi, V. Ferrante, A. Gay, D. Heymann, F. Luna, L. Marengo, G. Mondello, U. Pagano, R. Palma, M. Pugno, P. L. Sacco, A. Vercelli and to two anonymous referees. The usual disclaimer applies.