Intertemporal Equity and Efficient Allocation of Resources

Author: Mitra T.

Source: Journal of Economic Theory, Volume 107, Number 2, December 2002 , pp. 356-376(21)

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Abstract:

Competitive paths which are efficient are shown to satisfy a terminal cost minimization condition, thereby providing a continuous-time counterpart to the discrete-time result due to Malinvaud. Using this result, competitive paths which are equitable and efficient are shown to satisfy Hartwick's investment rule, which states that the value of net investment is zero at each date. Our result indicates that Hartwick's rule can help to signal inefficiency of competitive equitable paths. Journal of Economic Literature Classification Numbers: C61, D90, O41. © 2002 Elsevier Science (USA).

Keywords: intertemporal equity; efficiency; Hartwick'; s rule; terminal cost minimization.

Language: English

Document Type: Research article

DOI: http://dx.doi.org/10.1006/jeth.2001.2964

Affiliations: Department of Economics, Cornell University, 418 Uris Hall, Ithaca, New York, 14853

Publication date: 2002-12-01