One aspect of the latter condition is that generations have the choice to spend their own income on consumption, in the way they prefer. The research is based on welfare economics and is divided in a theoretical and an applied part. The models describe an ideal world with respect to consumers and producers behaviour. In this context, the relation between features of natural production functions and dynamic allocations is studied, e.g., which features can cause unsustainable dynamic development. Within the theoretic general framework, institutions are described which guide the economy towards sustainable dynamic allocations.
Special attention is paid to the intergenerational distributional aspects.
The theory is applied to the case of global climate change.