Abstract
For infinite-horizon optimal-growth problems the standard result in the literature says that a program is optimal if and only if associated with it is a sequence of present-value prices at which the program satisfies (i) a set of myopic “competitive conditions,” and (ii) an asymptotic “transversality condition”. The principal result of this paper points out the interesting and surprising fact that at least for a class of multisector models where the production side is described by a simple linear model, and there are some limiting primary factors, the competitive conditions alone characterize an optimal program.
Similar content being viewed by others
References
Brock, W.A. (1970): “On the Existence of Weakly Maximal Programmes in a Multi-Sector Economy”.Review of Economic Studies 37: 275–280.
Brock, W.A., and Majumdar, M. (1988): “On Characterizing Optimal Competitive Programs in Terms of Decentralized Conditions”.Journal of Economic Theory 45: 262–273.
Dasgupta, S., and Mitra, T. (1988): “Characterization of Intertemporal Optimality in Terms of Decentralizable Conditions: the Discounted Case”.Journal of Economic Theory 45: 274–287.
— (1990): “On Price Characterization of Optimal Plans in a Multi-Sector Economy”. InEconomic Theory and Policy, edited by B. Dutta, S. Gangopadhyay, D. Mookherjee, and D. Ray. Bombay: Oxford University Press.
— (1991): “Infinite Horizon Competitive Programs Are Optimal”. Working Paper no. 91-05. Department of Economics, Dalhousie University, Halifax, N.S.
— (1994): “Transversality Conditions in Optimum Growth Models with or without Discounting: a Unified View”.Estudios de Economía 21: 301–311.
Dorfman, R., Samuelson, P., and Solow, R. (1958):Linear Programming and Economic Analysis. New York: McGraw-Hill.
Gale, D. (1960):The Theory of Linear Economic Models. New York: McGraw-Hill.
— (1967): “On Optimal Development in a Multi-Sector Economy”.Review of Economic Studies 34: 1–18.
Gale, D., and Sutherland, W. R. S. (1968): “Analysis of a One Good Model of Economic Development”. InMathematics of the Decision Sciences, part 2, edited by G. B. Dantzig and A. F. Veinott, Jr. Providence, RI: American Mathematical Society.
Koopmans, T. C. (1957):Three Essays on the State of Economic Science. New York: McGraw-Hill.
Majumdar, M. (1974): “Efficient Programs in Infinite Dimensional Spaces: a Complete Characterization”.Journal of Economic Theory 7: 355–369.
— (1988): “Decentralization in Infinite Horizon Economies: an Introduction”.Journal of Economic Theory 45: 217–227.
Malinvaud, E. (1953): “Capital Accumulation and Efficient Allocation of Resources”.Econometrica 21: 233–268.
McKenzie, L. W. (1986): “Optimal Economic Growth, Turnpike Theorems and Comparative Dynamics”. InHandbook of Mathematical Economics, vol. III, edited by K. J. Arrow and M. D. Intriligator. Amsterdam: Elsevier.
Mitra, T., and Wan, H. Y., Jr. (1986): “On the Faustmann Solution to the Forest Management Problem”.Journal of Economic Theory 40: 229–249.
Peleg, B. (1970): Efficiency Prices for Optimal Consumption Plans, III.Journal of Mathematical Analysis and Applications 32: 630–638.
— (1974): “On Competitive Prices for Optimal Consumption Plans”.SIAM Journal of Applied Mathematics 26: 239–253.
Weitzman, M. L. (1973): “Duality Theory for Infinite Horizon Convex Models”.Management Science 19: 783–789.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Dasgupta, S., Mitra, T. Infinite-horizon competitive programs are optimal. Journal of Economics Zeitschrift für Nationalökonomie 69, 217–238 (1999). https://doi.org/10.1007/BF01231160
Received:
Revised:
Issue Date:
DOI: https://doi.org/10.1007/BF01231160