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Characterization of lntertemporal Optimality in Terms of Decentralizable Conditions: The Discounted Case

In: Decentralization in Infinite Horizon Economies

Author

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  • SWAPAN DASGUPTA
  • TAPAN MITRA

Abstract

The paper studies the problem of characterizing the optimality of competitive programs in terms of “decentralizable” conditions. We show that, when future utilities are discounted, and the optimal stationary stock is proportionately expansible, then optimality of competitive programs can be characterized by the condition that the scalar product of the difference of prices and quantities, between those of the given competitive program and those of the optimal stationary program, be non-positive period by period.

Suggested Citation

  • Swapan Dasgupta & Tapan Mitra, 2015. "Characterization of lntertemporal Optimality in Terms of Decentralizable Conditions: The Discounted Case," World Scientific Book Chapters, in: Mukul Majumdar (ed.), Decentralization in Infinite Horizon Economies, chapter 4, pages 58-71, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814699631_0004
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    Cited by:

    1. Calsamiglia, Xavier & Kirman, Alan, 1993. "A Unique Informationally Efficient and Decentralized Mechanism with Fair Outcomes," Econometrica, Econometric Society, vol. 61(5), pages 1147-1172, September.
    2. Tapan Mitra & Santanu Roy, 2022. "Propensity to consume and the optimality of Ramsey–Euler policies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(1), pages 55-89, February.
    3. Mukul Majumdar & Tapan Mitra, 1991. "Intertemporal decentralization," Finnish Economic Papers, Finnish Economic Association, vol. 4(2), pages 79-103, Autumn.
    4. Swapan Dasgupta & Tapan Mitra, 1999. "Infinite-horizon competitive programs are optimal," Journal of Economics, Springer, vol. 69(3), pages 217-238, October.
    5. Venkatesh Bala & Mukul Majumdar & Tapan Mitra, 1991. "Decentralized evolutionary mechanisms for intertemporal economies: A possibility result," Journal of Economics, Springer, vol. 53(1), pages 1-29, February.
    6. Mitra, Tapan & Roy, Santanu, 2017. "Optimality of Ramsey–Euler policy in the stochastic growth model," Journal of Economic Theory, Elsevier, vol. 172(C), pages 1-25.

    More about this item

    Keywords

    Efficient Allocations; Optimal Growth; Transversality Conditions; Decentralization; Mechanism Design; Rolling Plans;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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