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Sustainability of an economy relying on two reproducible assets

Listed author(s):
  • Robert D. Cairns
  • Stellio Del Campo
  • Vincent Martinet

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.

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File URL: http://economix.fr/pdf/dt/2017/WP_EcoX_2017-04.pdf
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Paper provided by University of Paris Nanterre, EconomiX in its series EconomiX Working Papers with number 2017-4.

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Length: 40 pages
Date of creation: 2017
Handle: RePEc:drm:wpaper:2017-4
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Web page: https://economix.fr/
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