Scandinavian Working Papers in Economics
Memorandum,
Oslo University, Department of Economics
No 08/2012: Characterizing the Sustainability Problem in an Exhaustible Resource Model
Mitra Tapan (), Geir B. Asheim (), Wolfgang Buchholz () and Cees Withagen ()
Additional contact information
Mitra Tapan: Department of Economics, Cornell University, Postal: Department of Economics, 418 Uris Hall , Cornell University, Ithaca , New York 14853, USA
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
Wolfgang Buchholz: Department of Economics, University of Regensburg, Postal: Department of Economics, University of Regensburg 93040 Regensburg , Germany
Cees Withagen: Department of Economics, VU University Amsterdam, Postal: Department of Economics, VU University Amsterdam , De Boelelaan 1105 , 1081 HV Amsterdam, The Netherlands
Abstract: The Dasgupta-Heal-Solow-Stiglitz model of capital accumulation and resource depletion poses the following sustainability problem: is it feasible to sustain indefinitely a level of consumption that is bounded away from zero? We provide a complete technological characterization of the sustainability problem in this model without reference to the time path. As a byproduct we show general existence of a maximin optimal path under weaker conditions that those employed in previous work. Our proofs yield new insights into the meaning and significance of Hartwick's reinvestment rule.
Keywords: Sustainability; Maximin
40 pages, March 5, 2012
Full text files
Memo-08-2012.pdf
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