Infinite-horizon competitive programs are optimal (Q1607533)

The aim of this paper is to investigate the price characterization of optimal paths in an infinite-horizon multisector optimal-growth model of the Ramsey-type, where the production side is described by a Leontief (sub)model. The standard result in the context of such problems is that a program is optimal (maximizing a discounted or undiscounted sum of utilities) if and only if, for the associated sequence of present-value prices, the program satisfies two types of conditions: (1) a set of myopic ``competitive conditions'', which are essentially inter-temporalprofit and utility maximization period-by-period; and (2) an appropriate asymptotic ``transversality condition'', saying that the present value of the capital shock asymptotically converges to zero (discount case) or is bounded (undiscounted case). The focus of the present paper is to obtain, for the investigated problem, sufficient conditions that ensure a program to be optimal. The main result of the paper is the interesting fact that in the class of multisector optimal-growth models where the production side is described by a simple linear model, with no joint production, with only one process for each good, and involving some limiting primary factors, an optimal program is proved to depend only of the competitive conditions. The paper thus points out that in a class of interesting dynamic-optimization models, there is no need to check the additional transversality condition. Expressed succinctly, this means that an infinite-horizon competitive program is optimal.