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Fair Production and Allocation of an Excludable Nonrival Good

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  • MANIQUET, François
  • SPRUMONT, Yves

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 at an allocation is measured by the quantity of the nonrival good that, consumed at no cost, would leave her indifferent to the bundle she is assigned.

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File URL: http://hdl.handle.net/1866/372
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Bibliographic Info

Paper provided by Universite de Montreal, Departement de sciences economiques in its series Cahiers de recherche with number 2002-04.

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Length: 14 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:mtl:montde:2002-04

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Keywords: fairness; excludable nonrival good; social orderings;

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References

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  1. Sprumont, Y., 1996. "Equal Factor Equivalence in Economies with Multiple Public Goods," Cahiers de recherche 9627, Universite de Montreal, Departement de sciences economiques.
  2. Moulin, Herve, 1994. "Serial Cost-Sharing of Excludable Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 61(2), pages 305-25, April.
  3. Maskin, Eric, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 23-38, January.
  4. LeBreton, M., 1994. "Arrovian Social Choice on Economic Domains," G.R.E.Q.A.M. 94a37, Universite Aix-Marseille III.
  5. M. Fleurbaey & F. Maniquet, 2008. "Fair social orderings," Economic Theory, Springer, vol. 34(1), pages 25-45, January.
  6. 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).
  7. Le Breton, Michel & Weymark, John, 2002. "Arrovian Social Choice Theory on Economic Domains," IDEI Working Papers 143, Institut d'Économie Industrielle (IDEI), Toulouse, revised Sep 2003.
  8. Hammond, Peter J, 1976. "Equity, Arrow's Conditions, and Rawls' Difference Principle," Econometrica, Econometric Society, vol. 44(4), pages 793-804, July.
  9. Moulin, Herve, 1987. "Egalitarian-Equivalent Cost Sharing of a Public Good," Econometrica, Econometric Society, vol. 55(4), pages 963-76, July.
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