Scarcity, regulation and endogenous technical progress (Q553529)

A firm having a vintage capital technology with two complementary factors, capital and resource input subject to quota, is considered. The resource is supposed to be increasingly scarce through an exogenously rising price. The authors study long-term growth regimes of the firm driven by scarcity, and long-term growth regimes driven by quota regulation. The interplay of the two regimes is characterized. An optimal long-term behavior of the firm is proposed.