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Justifying the Lindahl solution as an outcome of fair cooperation

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  • Wolfgang Buchholz
  • Wolfgang Peters

Abstract

The Lindahl equilibrium is mostly motivated by a rather artificial price mechanism. Even though the analogy to a competitive market has been emphasised by Lindahl himself his approach does not directly explain the normative ideas, which are behind this concept. In the present paper we therefore show how the Lindahl equilibrium can be deduced from some simple equity axioms that in particular are related to the equal sacrifice principle and a non-envy postulate as norms for distributional equity. Fairness among agents with different preferences is taken into account by considering their marginal willingnesses to pay as virtual prices. In this way it might also become more understandable why the Lindahl solution can be perceived as an outcome of fair cooperation.
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  • 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.
    • Handle: RePEc:kap:pubcho:v:133:y:2007:i:1:p:157-169
    DOI: 10.1007/s11127-007-9184-7
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    Cited by:

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    3. Kai Konrad & Stergios Skaperdas, 2012. "The market for protection and the origin of the state," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(2), pages 417-443, June.
    4. Wolfgang Buchholz & Richard Cornes & Wolfgang Peters, 2008. "Existence, uniqueness and some comparative statics for ratio and Lindahl equilibria," Journal of Economics, Springer, vol. 95(2), pages 167-177, November.
    5. Heindl, Peter & Kanschik, Philipp, 2016. "Ecological sufficiency, individual liberties, and distributive justice: Implications for policy making," Ecological Economics, Elsevier, vol. 126(C), pages 42-50.
    6. Tymon Słoczyński, 2012. "Zastosowanie zasady równych ofiar do oceny sprawiedliwości taryfy podatku dochodowego od osób fizycznych (PIT) w Polsce," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 10, pages 23-47.
    7. 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.
    8. Hassan Benchekroun & Charles Figuières & Mabel Tidball, 2016. "Implementation of the Lindahl Correspondance via Simple Indirect Mechanisms," Working Papers halshs-01378460, HAL.
    9. L.F.M. Groot & J. Swart, 2015. "From Nash to Lindahl in Climate Change Policy," Working Papers 15-01, Utrecht School of Economics.
    10. 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.
    11. Ferraz, Eduardo & Mantilla, César, 2023. "A mechanism for the efficient provision of Potential Pareto public goods," Journal of Public Economics, Elsevier, vol. 225(C).
    12. Jan Libich & Dat Thanh Nguyen, 2022. "When a compromise gets compromised by another compromise," Australian Economic Papers, Wiley Blackwell, vol. 61(4), pages 678-716, December.

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    More about this item

    Keywords

    Public goods; Lindahl equilibrium; Benefit principle; Fairness; Equity; C 78; D 63; H 41;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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