IDEAS home Printed from https://ideas.repec.org/a/spr/joecth/v49y2012i2p293-307.html
   My bibliography  Save this article

Sustainable markets with short sales

Author

Abstract

Market objectives can conflict with long-term goals. Behind the conflict is the impatience axiom introduced by T. Koopmans to describe choices over time. The conflict is resolved here by introducing a new concept, sustainable markets. These differ from Arrow-Debreu markets in that traders have sustainable preferences and no bounds on short sales. Sustainable preferences are sensitive to the basic needs of the present without sacrificing the needs of future generations and embody the essence of sustainable development (Chichilnisky 1996a, b). Theorems 1 and 2 show that limited arbitrage is a necessary and sufficient condition describing diversity and ensuring the existence of a sustainable market equilibrium where the invisible hand delivers sustainable as well as efficient solutions (Chichilnisky 1991, 1995; Chichilnisky and Heal 1998). In sustainable markets prices have a new role: they reflect both the value of instantaneous consumption and the value of the long-run future. The latter are suitably ambiguous, they are connected to the independence of the axiom of choice at the foundations of mathematics (Godel 1940).
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Graciela Chichilnisky, 2012. "Sustainable markets with short sales," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 49(2), pages 293-307, February.
    • Handle: RePEc:spr:joecth:v:49:y:2012:i:2:p:293-307
    DOI: 10.1007/s00199-011-0626-6
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s00199-011-0626-6
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s00199-011-0626-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. John S. Chipman & Guoqiang Tian, 2016. "Detrimental Externalities, Pollution Rights, and the “Coase Theorem”," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 473-492, Springer.
    2. Chichilnisky, Graciela, 2010. "The foundations of statistics with black swans," Mathematical Social Sciences, Elsevier, vol. 59(2), pages 184-192, March.
    3. Chichilnisky, Graciela, 1995. "Limited Arbitrage Is Necessary and Sufficient for the Existence of a Competitive Equilibrium with or without Short Sales," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(1), pages 79-108, January.
    4. Chichilnisky, Graciela, 1996. "Limited arbitrage is necessary and sufficient for the non-emptiness of the core," Economics Letters, Elsevier, vol. 52(2), pages 177-180, August.
    5. Geir B. Asheim & Tapan Mitra & Bertil Tungodden, 2016. "Sustainable Recursive Social Welfare Functions," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 165-190, Springer.
    6. Chichilnisky, Graciela, 1993. "The Cone Condition, Properness, and Extremely Desirable Commodities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(1), pages 177-182, January.
    7. Armon Rezai & Duncan K. Foley & Lance Taylor, 2016. "Global Warming and Economic Externalities," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 447-470, Springer.
    8. Graciela Chichilnisky, 1996. "Markets And Games: A Simple Equivalence Among The Core, Equilibrium And Limited Arbitrage," Metroeconomica, Wiley Blackwell, vol. 47(3), pages 266-280, October.
    9. Lauwers, Luc, 1993. "Infinite Chichilnisky rules," Economics Letters, Elsevier, vol. 42(4), pages 349-352.
    10. Chichilnisky Graciela & Heal Geoffrey M., 1993. "Competitive Equilibrium in Sobolev Spaces without Bounds on Short Sales," Journal of Economic Theory, Elsevier, vol. 59(2), pages 364-384, April.
    11. Graciela Chichilnisky, 1996. "An axiomatic approach to sustainable development," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(2), pages 231-257, April.
    12. Chichilnisky, Graciela, 1994. "Social Diversity, Arbitrage, and Gains from Trade: A Unified Perspective on Resource Allocation," American Economic Review, American Economic Association, vol. 84(2), pages 427-434, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jiafeng Gu, 2021. "Spatial Dynamics between Firm Sales and Environmental Responsibility: The Mediating Role of Corporate Innovation," Sustainability, MDPI, vol. 13(4), pages 1-18, February.
    2. Eveson, Simon P. & Thijssen, Jacco J.J., 2016. "Pareto optimality and existence of quasi-equilibrium in exchange economies with an indefinite future," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 138-152.
    3. Simon P. Eveson & Jacco J.J. Thijssen, 2012. "Beyond the Horizon: Attainability of Pareto Optimality when the Indefinite Future Matters," Discussion Papers 12/29, Department of Economics, University of York.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luc Lauwers, 2016. "Intergenerational Equity, Efficiency, and Constructibility," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 191-206, Springer.
    2. Chichilnisky, Graciela, 1997. "Limited arbitrage is necessary and sufficient for the existence of an equilibrium," Journal of Mathematical Economics, Elsevier, vol. 28(4), pages 470-479, November.
    3. Graciela Chichilnisky, 1996. "An axiomatic approach to sustainable development," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(2), pages 231-257, April.
    4. Larry Karp & Jiangfeng Zhang, 2016. "Taxes Versus Quantities for a Stock Pollutant with Endogenous Abatement Costs and Asymmetric Information," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 493-533, Springer.
    5. Charles Figuières & Mabel Tidball, 2016. "Sustainable Exploitation of a Natural Resource: A Satisfying Use of Chichilnisky’s Criterion," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 207-229, Springer.
    6. Jean-Marc Burniaux & Joaquim Oliveira Martins, 2016. "Carbon Leakages: A General Equilibrium View," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 341-363, Springer.
    7. Geir B. Asheim & Tapan Mitra & Bertil Tungodden, 2016. "Sustainable Recursive Social Welfare Functions," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 165-190, Springer.
    8. Graciela Chichilnisky, 1996. "Markets And Games: A Simple Equivalence Among The Core, Equilibrium And Limited Arbitrage," Metroeconomica, Wiley Blackwell, vol. 47(3), pages 266-280, October.
    9. Elinor Ostrom, 2016. "Nested Externalities and Polycentric Institutions: Must We Wait for Global Solutions to Climate Change Before Taking Actions at Other Scales?," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 259-276, Springer.
    10. Chichilnisky, Graciela, 2009. "Avoiding extinction: equal treatment of the present and the future," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-25.
    11. Chichilnisky, Graciela, 1996. "Limited arbitrage is necessary and sufficient for the non-emptiness of the core," Economics Letters, Elsevier, vol. 52(2), pages 177-180, August.
    12. Chichilnisky, Graciela, 1997. "A topological invariant for competitive markets," Journal of Mathematical Economics, Elsevier, vol. 28(4), pages 445-469, November.
    13. Tourky, Rabee, 1999. "Production equilibria in locally proper economies with unbounded and unordered consumers," Journal of Mathematical Economics, Elsevier, vol. 32(3), pages 303-315, November.
    14. Franck Lecocq & Jean-Charles Hourcade, 2016. "Unspoken Ethical Issues in the Climate Affair: Insights from a Theoretical Analysis of Negotiation Mandates," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 311-340, Springer.
    15. Fleurbaey, Marc, 2015. "On sustainability and social welfare," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 34-53.
    16. John S. Chipman & Guoqiang Tian, 2016. "Detrimental Externalities, Pollution Rights, and the “Coase Theorem”," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 473-492, Springer.
    17. Graciela Chichilnisky, 1996. "A robust theory of resource allocation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(1), pages 1-10, January.
    18. Geir B. Asheim, 2014. "Equitable intergenerational preferences and sustainability," Chapters, in: Giles Atkinson & Simon Dietz & Eric Neumayer & Matthew Agarwala (ed.), Handbook of Sustainable Development, chapter 8, pages 125-139, Edward Elgar Publishing.
    19. Chichilnisky, Graciela, 1996. "Markets with endogenous uncertainty: theory and policy," MPRA Paper 8612, University Library of Munich, Germany.
    20. Mertens, Jean-François & Rubinchik, Anna, 2012. "Intergenerational Equity And The Discount Rate For Policy Analysis," Macroeconomic Dynamics, Cambridge University Press, vol. 16(1), pages 61-93, February.

    More about this item

    Keywords

    Sustainability; Impatience; Axioms for sustainable preferences; Arbitrage; General equilibrium with infinite horizons; D4; Q2; Q5; Z0;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:49:y:2012:i:2:p:293-307. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.