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Equity and efficiency in an overlapping generation model

Author

Listed:
  • ISAAC, Tanguy

    (Université catholique de Louvain, CORE, Belgium)

  • PIACQUADIO, Paolo Giovanni

    (Université catholique de Louvain, CORE, Belgium; Aix-Marseille University, AMSE, France)

Abstract

The paper addresses intergenerational and intragenerational equity in an overlapping generation economy. We aim at defining an egalitarian distribution of a constant stream of resources, when preferences are ordinal and non-comparable. We establish the impossibility of efficiently distributing resources while treating equally agents with same preferences that belong to possibly different generations. We thus propose an egalitarian criterion based on the equal-split guarantee: this requires all agents to find their assigned consumption bundle at least as desirable as the equal division of resources. Finally, we show how to construct a cardinalization of the preferences that enables well-being comparisons: this allows defining the family of critical-level utilitarian orderings that top-rank the egalitarian solution.

Suggested Citation

  • ISAAC, Tanguy & PIACQUADIO, Paolo Giovanni, 2012. "Equity and efficiency in an overlapping generation model," LIDAM Discussion Papers CORE 2012059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2012059
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    Cited by:

    1. Emeline Bezin, 2019. "The economics of Green consumption, cultural transmission and sustainable technological change," PSE-Ecole d'économie de Paris (Postprint) halshs-02087970, HAL.
    2. Bezin, Emeline, 2019. "The economics of green consumption, cultural transmission and sustainable technological change," Journal of Economic Theory, Elsevier, vol. 181(C), pages 497-546.
    3. Piacquadio, Paolo G., 2014. "Intergenerational egalitarianism," Journal of Economic Theory, Elsevier, vol. 153(C), pages 117-127.
    4. Emeline Bezin, 2019. "The economics of Green consumption, cultural transmission and sustainable technological change," Post-Print halshs-02087970, HAL.
    5. Piacquadio, Paolo G., 2020. "The ethics of intergenerational risk," Journal of Economic Theory, Elsevier, vol. 186(C).
    6. Ram Sewak Dubey & Francesco Ruscitti, 2024. "Fair Allocations in an Overlapping Generations Economy," Studies in Microeconomics, , vol. 12(2), pages 172-199, August.

    More about this item

    Keywords

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    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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