Characterizing the Sustainability Problem in an Exhaustible Resource Model
39 Pages Posted: 28 Mar 2012
Date Written: March 27, 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.
Keywords: sustainability, maximin
JEL Classification: O100, Q320
Suggested Citation: Suggested Citation