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Sustainable Markets with Short Sales

In: The Economics of the Global Environment

Author

Listed:
  • Graciela Chichilnisky

    (Columbia University
    Columbia Consortium for Risk Management (CCRM))

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).

Suggested Citation

  • Graciela Chichilnisky, 2016. "Sustainable Markets with Short Sales," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 147-162, Springer.
    • Handle: RePEc:spr:steccp:978-3-319-31943-8_8
    DOI: 10.1007/978-3-319-31943-8_8
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    Cited by:

    1. is not listed on IDEAS
    2. 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.
    3. 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.
    4. 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.

    More about this item

    Keywords

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    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

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