Sustainability of an Economy Relying on Two Reproducible Assets

40 Pages Posted: 21 Feb 2017

See all articles by Robert D. Cairns

Robert D. Cairns

McGill University - Department of Economics

Stellio Del Campo

University Paris West Nanterre La Defense

Vincent Martinet

French National Institute for Agricultural Research (INRA) - UMR Economie Publique

Date Written: December 12, 2016

Abstract

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.

Keywords: sustainable development, maximin, sustainability accounting, substitutability

JEL Classification: O440, Q560

Suggested Citation

Cairns, Robert D. and Del Campo, Stellio and Martinet, Vincent, Sustainability of an Economy Relying on Two Reproducible Assets (December 12, 2016). CESifo Working Paper Series No. 6314. Available at SSRN: https://ssrn.com/abstract=2921070

Robert D. Cairns

McGill University - Department of Economics ( email )

855 Sherbrooke Street West
Montreal, QC H3A 2T7
Canada
514-398-3660 (Phone)
514-398-4938 (Fax)

Stellio Del Campo

University Paris West Nanterre La Defense ( email )

200, avenue de la Republique
Nanterre, 92000
France

Vincent Martinet (Contact Author)

French National Institute for Agricultural Research (INRA) - UMR Economie Publique ( email )

Centre de Grignon
BP01
Thiverval-Grignon, 78850
France

Register to save articles to
your library

Register

Paper statistics

Downloads
13
Abstract Views
197
PlumX Metrics