This paper presents a simple model of resource management that combines use of a nonrenewable resource, such as oil, with eventual transition to a backstop substitute resource in infinite supply (e.g., solar energy). In the context of this model, we derive golden rules that govern efficiency in...

In this paper, we apply the canonical approach of Ramsey, Koopmans, and Diamond to the problem of optimal and intertemporally-equitable growth with a non-renewable resource constraint and show that the solution is sustainable. The model is extended to cases involving environmental amenities and...

It is generally thought that legalization of the sale and use of currently illegal drugs would lead to a dramatic increase in drug use and social costs associated with drug abuse and criminal behavior. In this paper we show that it is not necessarily the case that legalization of drugs would be...

The welfare effects of grain price stabilization depend on the stabilization instrument and the source of instability. If the source is international market price instability, then even an omniscient (perfect forecasting) and omnipotent (zero storage costs) government cannot increase welfare by...

Several authors have argued that the second-best environmental tax on a “dirty good” is less than marginal emission damage associated with its consumption. These studies limit their analysis to cases in which emissions can only be reduced by a reduction of the dirty good. With a more general...