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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Paper provided by Centre interuniversitaire de recherche en économie quantitative, CIREQ in its series Cahiers de recherche with number
04-2002.
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Chambers, Christopher P. & Hayashi, Takashi, .
"Money metric utilitarianism,"
Working Papers
1295, California Institute of Technology, Division of the Humanities and Social Sciences.
[Downloadable!]
Marc Fleurbaey & Francois Maniquet, 2002.
"Fair Income Tax,"
Economics Working Papers
0021, Institute for Advanced Study, School of Social Science.
[Downloadable!]
Other versions:
MARC FLEURBAEY & FRANÇOIS MANIQUET, 2006.
"Fair Income Tax,"
Review of Economic Studies,
Blackwell Publishing, vol. 73(1), pages 55-83, 01.
[Downloadable!] (restricted)