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.

Memo-pdf

 

 

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