On characterizing optimal competitive programs in terms of decentralizable conditions
type: Item
instance of: scholarly article
title: On characterizing optimal competitive programs in terms of decentralizable conditions
zbMATH Open document ID: 0661.90014
DOI: 10.1016/0022-0531(88)90269-4
author: William A. Brock
author: Mukul Majumdar
published in: Journal of Economic Theory
publication date: 1988-01-01T00:00:00Z
review text: This paper considers a multisector model of intertemporal allocation, in which there are n producible goods and one primary factor. The paper shows that if the technology is stationary and admits a unique and expansible golden rule equilibrium, it is possible to construct an informationally decentralized mechanism that is consistent with the transversality condition for intertemporal optimality. The main result states that under appropriate convexity assumptions, a program is optimal if and only if (i) there exists a price sequence such that it is competitive at the price sequence, and (ii) appropriate computed values of the differences of stocks from the golden rule level are nonpositive. This second condition replaces the standard transversality condition for intertemporal optimality. The proof is provided in detail for the undiscounted case.
Mathematics Subject Classification ID: 91B62
zbMATH DE Number: 4081248
zbMATH Keywords: multisector model
zbMATH Keywords: intertemporal allocation
zbMATH Keywords: golden rule equilibrium
zbMATH Keywords: informationally decentralized mechanism
zbMATH Keywords: intertemporal optimality
MaRDI profile type: Publication
full work available at URL: 0022-0531(88)90269-4
OpenAlex ID: W2092237811
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description: scientific article; zbMATH DE number 4081248