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The Inada Conditions for Material Resource Inputs Reconsidered

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  • Stefan baumgärtner

Abstract

It is shown that the thermodynamic law of conservation of mass, the so-called Materials-Balance-Principle, implies that the marginal product as well as the average product of a material resource input are bounded from above. This means that the Inada conditions, one of the standard assumptions of economic growth theory, when applied to material resource inputs are inconsistent with a basic law of nature. The analysis is based on a model of multi-level production where intermediate goods are produced from elementary resources, and an all-purpose final commodity is produced from these intermediates. Copyright Kluwer Academic Publishers 2004

Suggested Citation

  • Stefan baumgärtner, 2004. "The Inada Conditions for Material Resource Inputs Reconsidered," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(3), pages 307-322, November.
  • Handle: RePEc:kap:enreec:v:29:y:2004:i:3:p:307-322
    DOI: 10.1007/s10604-003-5267-5
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    References listed on IDEAS

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    10. Barelli, Paulo & de Abreu Pessoa, Samuel, 2003. "Inada conditions imply that production function must be asymptotically Cobb-Douglas," Economics Letters, Elsevier, vol. 81(3), pages 361-363, December.
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    Cited by:

    1. Kronenberg, Tobias, 2010. "Finding common ground between ecological economics and post-Keynesian economics," Ecological Economics, Elsevier, vol. 69(7), pages 1488-1494, May.
    2. Chatterjee, Partha & Shukayev, Malik, 2008. "Note on positive lower bound of capital in the stochastic growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 32(7), pages 2137-2147, July.
    3. Jean-François FAGNART & Marc GERMAIN & Alphonse MAGNUS, 2013. "Soutenabilité forte, rente et partage de la valeur ajoutée," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2013021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. Fagnart, Jean-François & Germain, Marc, 2011. "Quantitative versus qualitative growth with recyclable resource," Ecological Economics, Elsevier, vol. 70(5), pages 929-941, March.
    5. Sousa, Tania & Domingos, Tiago, 2006. "Is neoclassical microeconomics formally valid? An approach based on an analogy with equilibrium thermodynamics," Ecological Economics, Elsevier, vol. 58(1), pages 160-169, June.
    6. Figueroa, Adolfo, 2013. "Economic growth and the environment," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    7. Krysiak, Frank C., 2006. "Entropy, limits to growth, and the prospects for weak sustainability," Ecological Economics, Elsevier, vol. 58(1), pages 182-191, June.

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