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Constant-utility paths in a resource-based economy

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  • Bazhanov, Andrei V.

Abstract

This paper analyzes a social planner's solution in a resource-based economy under a constant-utility criterion. The utility function includes social progress in a multiplicative form. The resulting paths of consumption include the patterns of growth that are conventionally used in the literature. A closed form solution, derived for the Dasgupta-Heal-Solow (DHS) model, includes the Solow–Hartwick result as a special case. This paper extends the link between the utilitarian criterion and the maximin for the cases with finite elasticity of marginal utility. The result also implies that economic growth in a resource-based economy may be slower than exponential; therefore, the expression for utility with social progress may become a more appropriate measure of sustainable growth than the percentage of consumption growth.

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Bibliographic Info

Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 35 (2013)
Issue (Month): 3 ()
Pages: 342-355

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Handle: RePEc:eee:resene:v:35:y:2013:i:3:p:342-355

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Web page: http://www.elsevier.com/locate/inca/505569

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Keywords: Necessary nonrenewable resource; Intertemporally nonseparable utility; Maximin; Sustainable consumption growth;

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