To seed, or not to seed? An endogenous labor supply approach in a simple overlapping generation economy

Abstract

ABSTRACTWithin this paper, we develop a simple overlapping generations model with a renewable resource (forest) in the spirit of Koskela et al. (2002). Seeding activities (more broadly, forestry) are introduced in the form of a domestic production as well as a joy‐of‐giving bequest motive regarding the resource. In this simple framework, we show that altruism always guarantee a positive resource level at the steady state. However, studying the dynamics, we point out that the stability of the steady state crucially depends upon both altruism and forestry productivity: under low forestry productivity the steady state is always stable, while under high forestry productivity two period cycles (flip bifurcation) can emerge near the steady state if and only if altruism is sufficiently high which raises the question of resource preservation and leads to the conclusion that the road to hell is paved with good intentions.