 Resource-envy-free and efficient allocations: A new solution for production economies with dedicated factorsJournal of Mathematical Economics, 2020, vol. 89, issue C, 1-7 Abstract: I consider the problem of determining an equitable and efficient allocation of resources in production economies with factors which must be dedicated to production and cannot be consumed directly. First, I show that in such economies envy-free and efficient allocations exist under standard assumptions. However, I argue this notion of fairness is unsuitable for the present context. I then introduce a new notion of fairness, which I call resource-envy-freeness. First, I associate with each consumption bundle its resource footprint consisting of the vector of factors used to produce it. I then show that preferences over consumption bundles can be extended to preferences over factor bundles. An allocation is resource-envy-free if no agent prefers another agent’s resource footprint to its own. The analysis of resource-envy-free allocations in production is exactly analogous to the analysis of envy-free allocations in exchange. I establish that resource-envy-free and efficient allocations exist under standard assumptions, and I demonstrate that such allocations are intuitively appealing. Keywords: Equity; Fairness; Efficiency; Production; Envy-free; Resource-envy-free (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:89:y:2020:i:c:p:1-7 DOI: 10.1016/j.jmateco.2020.03.009 Access Statistics for this article Journal of Mathematical Economics is currently edited by Atsushi (A.) Kajii More articles in Journal of Mathematical Economics from Elsevier |
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