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Buchholz, Wolfgang ; Peters, Wolfgang

Justifying the Lindahl Solution as an Outcome of Fair cooperation

Buchholz, Wolfgang and Peters, Wolfgang (2007) Justifying the Lindahl Solution as an Outcome of Fair cooperation. Public Choice 133 (1-2), pp. 157-169.

Date of publication of this fulltext: 05 Aug 2009 13:49
Article
DOI to cite this document: 10.5283/epub.5125


Abstract

The motivation for the Lindahl equilibrium is mostly a rather artificial price mechanism. Even though the analogy to a competitive market was emphasised by Lindahl himself, his approach does not directly explain the normative ideas behind his concept. In the present paper we therefore show how the Lindahl equilibrium can be deduced from some simple equity axioms. These normative assumptions are ...

The motivation for the Lindahl equilibrium is mostly a rather artificial price mechanism. Even though the analogy to a competitive market was emphasised by Lindahl himself, his approach does not directly explain the normative ideas behind his concept. In the present paper we therefore show how the Lindahl equilibrium can be deduced from some simple equity axioms. These normative assumptions are the benefit principle on the one hand and the equal sacrifice principle (or, equivalently, a non-envy condition) as a postulate for distributional equity on the other. Fairness among agents with different preferences and incomes is taken into account by considering their marginal willingness to pay as shadow prices. In this way, the reason why the Lindahl solution can be perceived as an outcome of fair cooperation might become more understandable.



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Details

Item typeArticle
Journal or Publication TitlePublic Choice
Publisher:SPRINGER
Place of Publication:DORDRECHT
Volume:133
Number of Issue or Book Chapter:1-2
Page Range:pp. 157-169
DateOctober 2007
InstitutionsBusiness, Economics and Information Systems > Institut für Volkswirtschaftslehre und Ökonometrie > Entpflichtete oder im Ruhestand befindliche Professoren > Lehrstuhl für Finanzwissenschaft, insbesondere Umweltökonomie (Prof. Dr. Wolfgang Buchholz)
Identification Number
ValueType
10.1007/s11127-007-9184-7DOI
KeywordsPUBLIC-GOODS; EQUITY; PROVISION; INCOME; COMPETITION; EQUILIBRIA; EFFICIENCY; TAXATION; public goods; Lindahl equilibrium; benefit principle; fairness; equity
Dewey Decimal Classification300 Social sciences > 330 Economics
StatusPublished
RefereedUnknown
Created at the University of RegensburgUnknown
Item ID5125

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