Intertemporal Equilibrium with a Resource Bequest Motive

In this paper we question the role of a joy-of-giving bequest motive of a privately-owned renewable resource for sustainability. We model an overlapping generations economy in which individuals are endowed with a renewable resource. This resource can be exploited at no cost by the young households and provided to production or bequeathed to the next generation. We highlight two main results. First, the mere existence of a bequest motive does not guarantee a sustainable outcome. Second, when the resource is preserved in equilibrium, its level does not necessarily coincide with the efficient one. Whether the resource stock is too high or too low the capital stock should be lower than the golden rule level