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Sustainability of an economy relying on two reproducible assets

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  • Robert D. Cairns
  • Stellio Del Campo
  • Vincent Martinet

Abstract

Evaluating the sustainability of a society requires a system of shadow or accounting values derived from the sustainability objective. As a first step toward the derivation of such shadow values for a maximin objective, this paper studies an economy composed of two reproducible assets, each producing one of two consumption goods. The effect of the substitutability between goods in utility is studied by postulating, in turn, neoclassical diminishing marginal substitutability, perfect substitutability and perfect complementarity. The degree of substitutability has strong effects on the maximin solution, affecting the regularity or non-regularity of the program, and on the accounting values. This has important consequences for the computation of genuine savings and the sustainability prospects of future generations.

Suggested Citation

  • Robert D. Cairns & Stellio Del Campo & Vincent Martinet, 2017. "Sustainability of an economy relying on two reproducible assets," EconomiX Working Papers 2017-4, University of Paris Nanterre, EconomiX.
  • Handle: RePEc:drm:wpaper:2017-4
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    References listed on IDEAS

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    More about this item

    Keywords

    sustainable development; maximin; sustainability accounting; substitutability.;

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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