Characterizing the Sustainability Problem in an Exhaustible Resource Model

39 Pages Posted: 28 Mar 2012

See all articles by Tapan Mitra

Tapan Mitra

Cornell University - Department of Economics

Geir B. Asheim

University of Oslo - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Wolfgang Buchholz

Universitaet Regensburg; CESifo (Center for Economic Studies and Ifo Institute)

Cees Withagen

Free University of Amsterdam; Tilburg University

Date Written: March 27, 2012

Abstract

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

Mitra, Tapan and Asheim, Geir B. and Buchholz, Wolfgang and Withagen, Cees A. M., Characterizing the Sustainability Problem in an Exhaustible Resource Model (March 27, 2012). CESifo Working Paper Series No. 3758. Available at SSRN: https://ssrn.com/abstract=2029498

Tapan Mitra

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States
607-255-6283 (Phone)

Geir B. Asheim (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway
+47-2285 5498 (Phone)
+47-2285 5035 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Wolfgang Buchholz

Universitaet Regensburg ( email )

D-93040 Regensburg, 93053
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Cees A. M. Withagen

Free University of Amsterdam ( email )

Tinbergen Institute De Boelelaan 1105
1081 HV Amsterdam
Netherlands

Tilburg University ( email )

Postbus 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

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