The economic theory of species extinction: Comment on smith |
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Authors: | Hans-Werner Sinn |
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Institution: | University of Mannheim, Faculty of Economics and Statistics, 6800 Mannheim, West Germany |
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Abstract: | A widely recognized article by Smith suggests that harvesting leading to species extinction may be socially optimal, provided that the species growth-potential is sufficiently low. It is shown that this conclusion hinges on special assumptions about harvest technology which, despite a superficial compatibility with neoclassical production theory, contradict a basic postulate of a pioneering article by Gordon. As soon as Gordon's postulate is taken into account, while all other aspects of Smith's model are maintained, it turns out that even a species with a very low growth potential should not become extinct. |
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