Economic dynamics with renewable resources and pollution

Abstract

This article considers a two-sector economy with externalities. In particular,the analysis involves an industrial sector whose production activities have negative effects on the regeneration of a natural resource in the other sector. Without the usual convexity or the super-modularity structure, we prove that the economy evolves to increase the net gain of stock, and establish the conditions ensuring the convergence of the economy in the long run.

A multidimensional, nonconvex model of optimal growth

“…Consider the economy à la Dam et al [3]. In this article, the authors study an economy with physical capital k t and renewable resources y t .…”

“…In their contribution, as in Dechert and Nishimura [4], the monotonicity of optimal path is a direct consequence of supermodularity. 3 When the optimal path is bounded, it converges either to a positive steady state or to zero.…”