Journal
JOURNAL OF ECONOMIC THEORY
Volume 107, Issue 2, Pages 356-376Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1006/jeth.2001.2964
Keywords
intertemporal equity; efficiency; Hartwick's rule; terminal cost minimization
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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. (C) 2002 Elsevier Science (USA).
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