This paper shows that the use of hyperbolic discounting in environmental regulation can have unfortunate consequences. In a three-period model we demonstrate that a planner who `naively` employs hyperbolic discounting and fails to anticipate problems of dynamic inconsistency, can oversee a...

We show that, in a model with substitutability between capital and resources, the path of sustainable development may be non-smooth, and may exhibit the overshooting property: starting from low levels of capital and resources, the economy may accumulate capital beyond its steady-state level,...

A standard model of the exploitation of a renewable resource by non-cooperating agents is considered. Under the assumption that the resource is sufficiently productive we prove that there exist infinitely many Markov-perfect Nash equilibria (MPNE). Although these equilibria lead to...