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Fair Production and Allocation of an Excludable Nonrival Good

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  • François Maniquet
  • Yves Sprumont

Abstract

We study fairness in economies with one private good and one partially excludable nonrival good. A social ordering function determines for each profile of preferences an ordering of all conceivable allocations. We propose the following Free Lunch Aversion condition: if the private good contributions of two agents consuming the same quantity of the nonrival good have opposite signs, reducing that gap improves social welfare. This condition, combined with the more standard requirements of Unanimous Indifference and Responsiveness, delivers a form of welfare egalitarianism in which an agent's welfare is measured by the quantity of the nonrival good that, consumed at no cost, would leave her indifferent to the bundle she is assigned. Copyright The Econometric Society 2004.

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Bibliographic Info

Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 72 (2004)
Issue (Month): 2 (03)
Pages: 627-640

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Handle: RePEc:ecm:emetrp:v:72:y:2004:i:2:p:627-640

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  1. Michel Le Breton & John A. Weymark, 2002. "Arrovian Social Choice Theory on Economic Domains," Vanderbilt University Department of Economics Working Papers 0206, Vanderbilt University Department of Economics, revised Sep 2003.
  2. Moulin, Herve, 1987. "Egalitarian-Equivalent Cost Sharing of a Public Good," Econometrica, Econometric Society, vol. 55(4), pages 963-76, July.
  3. Eric Maskin, 1998. "Nash Equilibrium and Welfare Optimality," Harvard Institute of Economic Research Working Papers 1829, Harvard - Institute of Economic Research.
  4. Sprumont, Y., 1996. "Equal Factor Equivalence in Economies with Multiple Public Goods," Cahiers de recherche 9627, Universite de Montreal, Departement de sciences economiques.
  5. d’ASPREMONT, Claude & GEVERS, Louis, 2001. "Social welfare functionals and interpersonal comparability," CORE Discussion Papers 2001040, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Hammond, Peter J, 1976. "Equity, Arrow's Conditions, and Rawls' Difference Principle," Econometrica, Econometric Society, vol. 44(4), pages 793-804, July.
  7. M. Fleurbaey & F. Maniquet, 2008. "Fair social orderings," Economic Theory, Springer, vol. 34(1), pages 25-45, January.
  8. Moulin, Herve, 1994. "Serial Cost-Sharing of Excludable Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 61(2), pages 305-25, April.
  9. LeBreton, M., 1994. "Arrovian Social Choice on Economic Domains," G.R.E.Q.A.M. 94a37, Universite Aix-Marseille III.
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