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Equal sacrifice and fair burden-sharing in a public goods economy

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  • Wolfgang Buchholz
  • Wolfgang Peters

Abstract

Applying a willingness to pay approach known from contingent valuation in environmental economics, we develop an ordinally based measure for the size of individual sacrifice that is connected with an agent's contribution to a public good. We construct a selection mechanism that picks the unique efficient solution among all allocations that have an equal sacrifice as defined in this way. We show that the solution thus obtained correspond to Moulin’s egalitarian equivalent allocation, conforms to both the ability to pay and the benefit principles, and has much in common with the Lindahl equilibrium.
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Suggested Citation

  • Wolfgang Buchholz & Wolfgang Peters, 2008. "Equal sacrifice and fair burden-sharing in a public goods economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(4), pages 415-429, August.
    • Handle: RePEc:kap:itaxpf:v:15:y:2008:i:4:p:415-429
    DOI: 10.1007/s10797-008-9073-0
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    2. Lange, Andreas & Vogt, Carsten & Ziegler, Andreas, 2007. "On the importance of equity in international climate policy: An empirical analysis," Energy Economics, Elsevier, vol. 29(3), pages 545-562, May.
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    4. Wolfgang Buchholz & Wolfgang Peters, 2007. "Justifying the Lindahl solution as an outcome of fair cooperation," Public Choice, Springer, vol. 133(1), pages 157-169, October.
    5. Wolfgang Buchholz & Richard Cornes & Wolfgang Peters, 2006. "Lindahl Equilibrium Versus Voluntary Contribution to a Public Good: The Role of the Income Distribution," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(1), pages 28-49, March.
    6. Lasse Ringius & Asbjørn Torvanger & Arild Underdal, 2002. "Burden Sharing and Fairness Principles in International Climate Policy," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 2(1), pages 1-22, March.
    7. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185, September.
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    19. Moyes, Patrick, 2003. "Redistributive effects of minimal equal sacrifice taxation," Journal of Economic Theory, Elsevier, vol. 108(1), pages 111-140, January.
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    Cited by:

    1. L.F.M. Groot & J. Swart, 2015. "From Nash to Lindahl in Climate Change Policy," Working Papers 15-01, Utrecht School of Economics.
    2. Bruno Martorano, 2014. "The Impact of Uruguay's 2007 Tax Reform on Equity and Efficiency," Development Policy Review, Overseas Development Institute, vol. 32(6), pages 701-714, November.
    3. Wolfgang Buchholz & Alexander Haupt & Wolfgang Peters, 2016. "Equity as a Prerequisite for Stability of Cooperation on Global Public Good Provision," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 61-78, September.
    4. Loek Groot & Julia Swart, 2018. "Climate change control: the Lindahl solution," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 23(5), pages 757-782, June.

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    More about this item

    Keywords

    Public goods; Cooperative solutions; Fairness; Egalitarian-equivalent solutions; H41;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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