Kantian Equilibrium, Income Inequality, and Global Public Goods

Yukihiro Nishimura ()
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Yukihiro Nishimura: Osaka University and CESifo

No 25-04-Rev2., Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper develops a Kantian equilibrium framework that extends the global pollution model with private ownership, where agents condition their contributions on a universalizable moral imperative reflecting both income and preference heterogeneity. For both the Lindahl outcome and other proposed mechanisms, we identify specific proportionality conditions under which Kantian reasoning replicates these solutions as equilibrium behavior. We further show that the provision of public good does not necessarily increase with income inequality, and that some solutions exhibit invariance to inequality. Finally, we demonstrate that tradable permits may fail to achieve sufficient international redistribution to Southern countries to generate Pareto improvements over the voluntary contribution (disagreement) equilibrium. Grandfathering involves a form of proportionality between income and permit endowments, we show that this structure is better motivated by altruism. 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: 18 pages
Date: 2025-06, Revised 2025-07
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