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Intergenerational equity, efficiency, and constructibility

  • Luc Lauwers

    ()

Global environmental issues - like biodiversity conservation or climate change - are in reality long term issues that are not properly taken into account with traditional models that incorporate the impatience axiom manifested in fixed discount factors and in the use of present discounted utility criteria. When both the short and the very long run are important, one can appeal to overtaking criteria and Chichilnisky criteria. Unfortunately, overtaking criteria are highly incomplete. In order to decrease this incompleteness, stronger anonymity (or equity) axioms were developed. I show that a maximal anonymity axiom compatible with Pareto is a non-constructible object; its existence relies on the Axiom of Choice. The Chichilnisky criterion is based upon two axioms: non dictatorship of the present and non dictatorship of the future. Here, the very long run is captured by a finitely additive measure. Such a measure is a non-constructible object and has therefore no explicit description.

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Article provided by Springer in its journal Economic Theory.

Volume (Year): 49 (2012)
Issue (Month): 2 (February)
Pages: 227-242

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Handle: RePEc:spr:joecth:v:49:y:2012:i:2:p:227-242
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  1. Francisco Alvarez-Cuadrado & Ngo Van Long, 2007. "A Mixed Bentham-Rawls Criterion For Intergenerational Equity: Theory And Implications," Departmental Working Papers 2007-03, McGill University, Department of Economics.
  2. ASHEIM, Geir B. & d’ASPREMONT, Claude & BANERJEE, Kuntal, 2008. "Generalized time-invariant overtaking," CORE Discussion Papers 2008065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  13. Luc LAUWERS, 2009. "Ordering infinite utility streams comes at the cost of a non-Ramsey set," Center for Economic Studies - Discussion papers ces09.05, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  14. Kamaga, Kohei & Kojima, Takashi, 2008. "On the leximin and utilitarian overtaking criteria with extended anonymity," PIE/CIS Discussion Paper 392, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  15. Zame, William R., 2007. "Can intergenerational equity be operationalized?," Theoretical Economics, Econometric Society, vol. 2(2), June.
  16. FLEURBAEY, Marc & MICHEL, Philippe, 1997. "Intertemporal equity and the extension of the Ramsey criterion," CORE Discussion Papers 1997004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. John Chipman & Guoqiang Tian, 2012. "Detrimental externalities, pollution rights, and the “Coase theorem”," Economic Theory, Springer, vol. 49(2), pages 309-327, February.
  18. Luc LAUWERS, 2010. "Purely finitely additive measures are non-constructible objects," Center for Economic Studies - Discussion papers ces10.10, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  19. Christopher Chambers, 2009. "Intergenerational equity: sup, inf, lim sup, and lim inf," Social Choice and Welfare, Springer, vol. 32(2), pages 243-252, February.
  20. Armon Rezai & Duncan Foley & Lance Taylor, 2012. "Global warming and economic externalities," Economic Theory, Springer, vol. 49(2), pages 329-351, February.
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