Renewable Resources, Capital Accumulation and Sustainability
Abstract
A profit maximizing firm producing a commodity with the aid of renewable resource and physical capital is considered to examine the existence and nature of steady state in the resource and capital accumulation. The model is then compared with an alternative resource management regime in which the social utility defined on the consumption and resource stock levels is to be maximized. For both social utility maximization and private profit motive regimes, the economy approaches a stationary state with larger resource stock than the stock level guaranteeing the maximum reproduction rate of resource. However, the sufficient conditions for supporting this result are different between the two regimes
