Kantian Equilibrium, Income Inequality, and Global Public Goods

Yukihiro Nishimura ()
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Yukihiro Nishimura: Osaka University and CESifo

No 25-04-Rev., Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper develops a Kantian equilibrium framework, subsuming the global pollution model with private ownership, wherein agents condition their contributions on a universalizable moral imperative reflecting income and preference heterogeneity. After showing a specific proportionality assumption linking Kantian reasoning to other agents’ behavior that must make the Kantian equilibrium coincide with the Lindahl equilibrium, we show that the level of the public good may or may not increase with income inequality. Inequality invariance is observed in some solution. Applying this model to a global pollution context, we demonstrate that the Lindahl allocation may fail to Pareto dominate the voluntary contribution (disagreement) equilibrium. We compare the Lindahl outcome with other proposed solutions to global public good provision, focusing in particular on the role of international income transfers and their ability to achieve Pareto improvements over the voluntary contribution (disagreement) equilibrium. Our analysis contributes to a reinterpretation of morally grounded mechanisms for global public good provision, bridging normative ethics with economic design.

Keywords: Global externalities; Kantian equilibrium; Income inequality; International emissions trading (search for similar items in EconPapers)
JEL-codes: D63 H41 Q54 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2025-06, Revised 2025-07
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