Characterizing the Sustainability Problem in an Exhaustible Resource Model

Tapan Mitra, Geir B. Asheim, Wolfgang Buchholz and Cees Withagen

Memo 08/2012


The Dasgupta-Heal-Solow-Stiglitz model of capital accumulation and resource depletion poses the following sustainability problem: is it feasible to sustain indefinitely a level of consumption that is bounded away from zero? We provide a complete technological characterization of the sustainability problem in this model without reference to the time path. As a byproduct we show general existence of a maximin optimal path under weaker conditions that those employed in previous work. Our proofs yield new insights into the meaning and significance of Hartwick's reinvestment rule.




Published June 23, 2014 10:17 AM - Last modified Jan. 30, 2019 7:55 AM