Intragenerational externalities and intergenerational transfers

Martin Kolmar and Volker Meier

Journal of Pension Economics and Finance, 2012, vol. 11, issue 4, 531-548

Abstract: In an environment with asymmetric information and intragenerational externalities, the implementation of a first-best efficient Clarke–Groves–Vickrey mechanism may not be feasible if it has to be self-financing. By using intergenerational transfers, the arising budget deficit can be covered in every generation only if the initial allocation is not dynamically efficient. While introducing a pay-as-you-go scheme without addressing the externality already yields a Pareto improvement, further welfare gains can be captured by using the additional resources to achieve a perfect internalization.

Date: 2012
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Working Paper: Intragenerational externalities and intergenerational transfers (2012)
Working Paper: Intra-Generational Externalities and Inter-Generational Transfers (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jpenef:v:11:y:2012:i:04:p:531-548_00

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