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Fair Production and Allocation of an Excludable Nonrival Good
Author(s) -
Maniquet François,
Sprumont Yves
Publication year - 2004
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.1111/j.1468-0262.2004.00503.x
Subject(s) - excludability , microeconomics , egalitarianism , social welfare function , economics , production (economics) , private good , welfare , function (biology) , social welfare , public good , social preferences , law , market economy , evolutionary biology , politics , political science , biology
We study fairness in economies with one private good and one partially excludable nonrival good. A social ordering function determines for each profile of preferences an ordering of all conceivable allocations. We propose the following Free Lunch Aversion condition: if the private good contributions of two agents consuming the same quantity of the nonrival good have opposite signs, reducing that gap improves social welfare. This condition, combined with the more standard requirements of Unanimous Indifference and Responsiveness, delivers a form of welfare egalitarianism in which an agent's welfare is measured by the quantity of the nonrival good that, consumed at no cost, would leave her indifferent to the bundle she is assigned.