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Equity and efficiency in an overlapping generation model

Tanguy Isaac () and Paolo Giovanni Piacquadio
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Tanguy Isaac: Université catholique de Louvain, CORE, Belgium

No 2012059, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: The paper addresses intergenerational and intragenerational equity in an overlapping generation economy. We aim at defining an egalitarian distribution of a constant stream of resources, when preferences are ordinal and non-comparable. We establish the impossibility of efficiently distributing resources while treating equally agents with same preferences that belong to possibly different generations. We thus propose an egalitarian criterion based on the equal-split guarantee: this requires all agents to find their assigned consumption bundle at least as desirable as the equal division of resources. Finally, we show how to construct a cardinalization of the preferences that enables well-being comparisons: this allows defining the family of critical-level utilitarian orderings that top-rank the egalitarian solution.

Keywords: intergenerational equity; intragenerational equity; overlapping generation model; no-envy; equal-split guarantee; allocation rules; utilitarian welfare function (search for similar items in EconPapers)
JEL-codes: D61 D63 D91 (search for similar items in EconPapers)
Date: 2012-12-31
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http://uclouvain.be/cps/ucl/doc/core/documents/coredp2012_59web.pdf (application/pdf)

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Journal Article: Equity and efficiency in an overlapping generation model (2015) Downloads
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