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Characterizing the Sustainability Problem in an Exhaustible Resource Model

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  • Tapan Mitra
  • Geir B. Asheim
  • Wolfgang Buchholz
  • Cees A. Withagen

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.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2012/wp-cesifo-2012-03/cesifo1_wp3758.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3758.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3758

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Keywords: sustainability; maximin;

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References

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  1. Withagen, Cees & B. Asheim, Geir, 1998. "Characterizing sustainability: The converse of Hartwick's rule," Journal of Economic Dynamics and Control, Elsevier, vol. 23(1), pages 159-165, September.
  2. Burmeister, Edwin & Hammond, P J, 1977. "Maximin Paths of Heterogeneous Capital Accumulation and the Instability of Paradoxical Steady States," Econometrica, Econometric Society, vol. 45(4), pages 853-70, May.
  3. Dasgupta, Swapan & Mitra, Tapan, 2002. "Intertemporal Equity and Hartwick's Rules in an Exhaustible Resource Model," Working Papers 02-05, Cornell University, Center for Analytic Economics.
  4. Zuber, Stéphane & Asheim, Geir B., 2012. "Justifying social discounting: The rank-discounted utilitarian approach," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1572-1601.
  5. Dixit, Avinash & Hammond, Peter & Hoel, Michael, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," Review of Economic Studies, Wiley Blackwell, vol. 47(3), pages 551-56, April.
  6. Mitra, Tapan, 2000. "Intertemporal Equity and Efficient Allocation of Resources," Working Papers 00-12, Cornell University, Center for Analytic Economics.
  7. Mitra, Tapan & Asheim, Geir B. & Buchholz, Wolfgang & Withagen, Cees, 2013. "Characterizing the sustainability problem in an exhaustible resource model," Journal of Economic Theory, Elsevier, vol. 148(5), pages 2164-2182.
  8. Geir B. Asheim & Tapan Mitra, 2009. "Sustainability and Discounted Utilitarianism in Models of Economic Growth," CESifo Working Paper Series 2521, CESifo Group Munich.
  9. Dasgupta, Swapan & Mitra, Tapan, 1983. "Intergenerational Equity and Efficient Allocation of Exhaustible Resources," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 133-53, February.
  10. Cass, David, 1990. "Indefinitely sustained consumption despite exhaustible natural resources," CEPREMAP Working Papers (Couverture Orange) 9027, CEPREMAP.
  11. John Hartwick, 1976. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," Working Papers 220, Queen's University, Department of Economics.
  12. Geir B. Asheim & Wolfgang Buchholz & John M. Hartwick & Tapan Mitra & Cees A. Withagen, 2005. "Constant Savings Rates and Quasi-Arithmetic Population Growth under Exhaustible Resource Constraints," CESifo Working Paper Series 1573, CESifo Group Munich.
  13. Cairns, Robert D. & Long, Ngo Van, 2006. "Maximin: a direct approach to sustainability," Environment and Development Economics, Cambridge University Press, vol. 11(03), pages 275-300, June.
  14. Martinet, V. & Doyen, L., 2007. "Sustainability of an economy with an exhaustible resource: A viable control approach," Resource and Energy Economics, Elsevier, vol. 29(1), pages 17-39, January.
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Cited by:
  1. Tapan Mitra & Geir B Asheim & Wolfgang Buchholz & Cees Withagen, 2012. "Characterizing the Sustainability Problem in an Exhaustible Resource Model," OxCarre Working Papers 083, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  2. Robert D. Cairns & Vincent Martinet, 2013. "An Environmental-Economic Measure of Sustainable Development," CESifo Working Paper Series 4327, CESifo Group Munich.

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