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Linear production function, externalities and indeterminacy in a capital-resource growth model

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  • Carboni, Oliviero A.
  • Russu, Paolo

Abstract

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.

Suggested Citation

  • Carboni, Oliviero A. & Russu, Paolo, 2013. "Linear production function, externalities and indeterminacy in a capital-resource growth model," Journal of Mathematical Economics, Elsevier, vol. 49(5), pages 422-428.
    • Handle: RePEc:eee:mateco:v:49:y:2013:i:5:p:422-428
    DOI: 10.1016/j.jmateco.2013.04.002
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    3. OA Carboni & P. Russu, 2012. "Global Indeterminacy in a Tourism Sector Model," Working Paper CRENoS 201230, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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