Equity and Efficiency in Overlapping Generations Economies

Tomoichi Shinotsuka, Koichi Suga, Kotaro Suzumura and Koichi Tadenuma

Chapter 2 in Intergenerational Equity and Sustainability, 2007, pp 20-35 from Palgrave Macmillan

Abstract: Abstract This chapter studies equity and efficiency of allocations in the overlapping generations economy formulated by Samuelson (1958). A central notion of distributional equity is no-envy (Foley, 1967; Kolm, 1972): no person prefers the consumption of any other person to his/her own. Suzumura (2002) proposed three distinct notions of equity based on no-envy in overlapping generations economies. The first one concerns contemporary (overlapping) consumptions in each time period. It requires that for each period, no person should prefer the consumption of any other person in that period to his/her own. In contrast, the second notion is about lifetime consumption plans. It stipulates that no person should prefer the lifetime consumption plan of any other person to his/her own. The third notion is based on the lifetime rate of return due to Cass and Yaari (1966). It simply requires an equal lifetime rate of return for all persons.

Date: 2007
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DOI: 10.1057/9780230236769_2

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