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Intragenerational externalities and intergenerational transfers

  • KOLMAR, MARTIN
  • MEIER, VOLKER

In an environment with asymmetric information the implementation of a first-best efficient Clarke-Groves-Vickrey (D’Aspremont-Gérard-Varet) mechanism may not be feasible if it has to be self-financing. By using intergenerational transfers, the arising budget deficit can generally be covered in every generation if the growth rate of the economy is positive. This result yields an alternative explanation for the existence of pay-as-you-go financed transfer mechanisms.

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Article provided by Cambridge University Press in its journal Journal of Pension Economics and Finance.

Volume (Year): 11 (2012)
Issue (Month): 04 (October)
Pages: 531-548

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Handle: RePEc:cup:jpenef:v:11:y:2012:i:04:p:531-548_00
Contact details of provider: Postal: Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK
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  19. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
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