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Fair Intergenerational Sharing of a Natural Resource

  • Hippolyte D'Albis

    ()

    (LERNA - Economie des Ressources Naturelles - Institut national de la recherche agronomique (INRA) - CEA - UT1 - Université Toulouse 1 Capitole, TSE - Toulouse School of Economics - Toulouse School of Economics)

  • Stefan Ambec

    (LERNA - Economie des Ressources Naturelles - Institut national de la recherche agronomique (INRA) - CEA - UT1 - Université Toulouse 1 Capitole, TSE - Toulouse School of Economics - Toulouse School of Economics)

In this article, overlapping generations are extracting a natural resource over an infinite future. We examine the fair allocation of resource and compensations among generations. Fairness is defined by core lower bounds and aspiration upper bounds. The core lower bounds require that every coalition of generations obtains at least what it could achieve by itself. The aspiration upper bounds require that no coalition of generations enjoys a higher welfare than it would achieve if nobody else extracted the resource. We show that, upon existence, the allocation that satisfies the two fairness criteria is unique and assigns to each generation its marginal contribution to the preceding generation. Finally, we describe the dynamics of such an allocation.

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Paper provided by HAL in its series Post-Print with number hal-00630440.

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Date of creation: Mar 2010
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Publication status: Published in Mathematical Social Sciences, Elsevier, 2010, 59 (2), pp.170-183. <10.1016/j.mathsocsci.2009.10.004>
Handle: RePEc:hal:journl:hal-00630440
DOI: 10.1016/j.mathsocsci.2009.10.004
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00630440
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  1. Ambec, S. & Sprumont, Y., 2000. "Sharing a River," Cahiers de recherche 2000-08, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  2. Marini Giancarlo & Scaramozzino Pasquale, 1995. "Overlapping Generations and Environmental Control," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 64-77, July.
  3. Ambec, S. & Ehlers, L., 2006. "Sharing a river among satiable countries," Working Papers 200605, Grenoble Applied Economics Laboratory (GAEL).
  4. Bossert, Walter & Sprumont, Yves & Suzumura, Kotaro, 2007. "Ordering infinite utility streams," Journal of Economic Theory, Elsevier, vol. 135(1), pages 579-589, July.
  5. Ambec, S., 2006. "Sharing a common resource with concave benefits," Working Papers 200601, Grenoble Applied Economics Laboratory (GAEL).
  6. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
  7. Calvo, Guillermo A & Obstfeld, Maurice, 1988. "Optimal Time-Consistent Fiscal Policy with Finite Lifetimes," Econometrica, Econometric Society, vol. 56(2), pages 411-32, March.
  8. Moulin, H., 1989. "Uniform Externalities: Two Axioms For Fair Allocation," UFAE and IAE Working Papers 117-89, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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