Market Dynamics, Dynamic Resource Management and Environmental Policy in the Context of (Strong) Sustainability

32 Pages Posted: 24 Dec 2010

See all articles by Torben Klarl

Torben Klarl

University of Augsburg - Faculty of Business and Economics; ZEW

Date Written: December 22, 2010

Abstract

In this paper, we investigate the relationship between market dynamics, dynamic resource management and environmental policy. In contrast to static market entry games, this paper draws attention to the effects of market dynamics on resource dynamics et vice versa, because (1) we show that feedback processes are necessary for obtaining a better understanding of what drives the dynamics between the evolution of common-pool resources and the number of harvesters and more importantly, (2) this analysis provides an environment discussing sustainability in an appropriate inasmuch dynamic way. The paper makes following major points: (1) Interpreting the monopoly-scenario as a non-cooperative solution and the firm coexistence solution as a cooperative solution, it is shown that the coexistence solution of this model implies a degenerate saddle-node equilibrium. (2) An increasing number of harvesters does not necessarily imply a lower stock of the common-pool resource in the long run. (3) The paper introduces a way establishing an output-sharing solution by implementing an output tax, which turns out to be a pure effort tax in the long run. (4) Strong resource sustainability is not possible, given cost reducing technological progress is relevant and policy interventions ceased. With respect to environmental policy, we can conclude that a tax scheme is not a substitute to a partnership solution dealing with the common-pool problem, but is treated as an instrument establishing such a solution in the sense of a policy mix approach.

Keywords: Sustainability, Resource Management, Environmental Policy, Common Resources, Population Dynamics

JEL Classification: Q28, Q57, C61

Suggested Citation

Klarl, Torben, Market Dynamics, Dynamic Resource Management and Environmental Policy in the Context of (Strong) Sustainability (December 22, 2010). Available at SSRN: https://ssrn.com/abstract=1730236 or http://dx.doi.org/10.2139/ssrn.1730236

Torben Klarl (Contact Author)

University of Augsburg - Faculty of Business and Economics ( email )

Augsburg, 86135
Germany

ZEW ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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