Scandinavian Working Papers in Economics
Memorandum,
Oslo University, Department of Economics
No 17/2006: Infinite-horizon choice functions
Geir B. Asheim (), Walter Bossert (), Yves Sprumont () and Kotaro Suzumura ()
Additional contact information
Geir B. Asheim: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Walter Bossert: D´epartement de Sciences Economiques and CIREQ, Universit´e de Montr´eal, Postal: C.P. 6128, succursale Centre-ville, Montr´eal QC H3C 3J7, Canada
Yves Sprumont: D´epartement de Sciences Economiques and CIREQ, Universit´e de Montr´eal, Postal: C.P. 6128, succursale Centre-ville, Montr´eal QC H3C 3J7, Canada
Kotaro Suzumura: Institute of Economic Research, Hitotsubashi University, Postal: Kunitachi, Tokyo 186-8603, Japan
Abstract: We analyze infinite-horizon choice functions within the setting of a simple linear technology. Time consistency and efficiency are characterized by stationary consumption and inheritance functions, as well as a transversality condition. In addition, we consider the equity axioms Suppes-Sen, Pigou-Dalton, and resource monotonicity. We show that Suppes-Sen and Pigou-Dalton imply that the consumption and inheritance functions are monotone with respect to time—thus justifying sustainability—while resource monotonicity implies that the consumption and inheritance functions are monotone with respect to the resource. Examples illustrate the characterization results.
Keywords: Intergenerational resource allocation; infinite-horizon choice
24 pages, May 15, 2006
Full text files
Memo-17-2006.pdf
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