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Fair division with general equilibrium effects and international climate politics

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  • Böhringer, Christoph
  • Helm, Carsten

Abstract

This paper introduces a solution for the fair division of common property resources in production economies with multiple inputs and outputs. It is derived from complementing the Walrasian solution by welfare bounds, whose ethical justification rests on commonality of ownership. We then apply this solution to the question of burden sharing in the climate change regime, using an intertemporal computable general equilibrium model. For a wide range of initial allocations of CO2 emission rights, we find that developing countries should participate in emission reduction efforts in order to increase their global efficiency, but should also be fully compensated for their incremental abatement costs.

Suggested Citation

  • Böhringer, Christoph & Helm, Carsten, 2001. "Fair division with general equilibrium effects and international climate politics," ZEW Discussion Papers 01-67, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5423
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    References listed on IDEAS

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    1. Moulin, Herve, 1992. "An Application of the Shapley Value to Fair Division with Money," Econometrica, Econometric Society, vol. 60(6), pages 1331-1349, November.
    2. Adam Rose & Brandt Stevens & Jae Edmonds & Marshall Wise, 1998. "International Equity and Differentiation in Global Warming Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(1), pages 25-51, July.
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    Cited by:

    1. Lange, Andreas, 2004. "The Impact of Equity-preferences on the Stability of Heterogeneous International Agreements," ZEW Discussion Papers 04-50, ZEW - Leibniz Centre for European Economic Research.
    2. Marco Grasso, 2004. "A Normative Framework of Justice in Climate Change," Working Papers 79, University of Milano-Bicocca, Department of Economics, revised Jul 2004.
    3. Andreas Lange, 2006. "The Impact of Equity-preferences on the Stability of International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(2), pages 247-267, June.

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    More about this item

    Keywords

    Fair division; climate change; common property resources; welfare bounds; CGE models;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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