Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86721
Authors: 
Polasky, Stephen
de Zeeuw, Aart
Wagener, Florian
Year of Publication: 
2010
Series/Report no.: 
Tinbergen Institute Discussion Paper 10-111/1
Abstract: 
We analyze how the threat of a potential future regime shift affects optimal management. We use a simple general growth model to analyze four cases that involve combinations of stock collapse versus changes in system dynamics, and exogenous versus endogenous probabilities of regime shift. Prior work has focused on stock collapse with endogenous probabilities and reaches ambiguous conclusions about the effect of potential regime shift on optimal management. We show that all other cases yield unambiguous results. In particular, with endogenous probability of regime shift that affects system dynamics the potential for regime shift causes optimal management to become precautionary.
Subjects: 
optimal management
growth
renewable resources
regime shift
JEL: 
E61
O40
Q20
C61
Document Type: 
Working Paper

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