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Fair division theory and climate change policy

Published online by Cambridge University Press:  01 August 2008

CARSTEN HELM
CARSTEN HELM*
Affiliation:
Department of Law and Economics, Technical University Darmstadt, Marktplatz 15, D-64283 Darmstadt. Tel: +49 6151 16-2095. Fax: +49 6151 16-6043. Email: [email protected]
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Abstract

This paper analyzes the fair division of common property resources when monetary compensations are feasible. A prominent example is the fair division of the atmosphere's limited absorptive capacity for greenhouse gases. I propose a solution that is Pareto efficient and satisfies the axiomatic fair division criteria of individual rationality, stand-alone upper bound, and a version of envy-freeness. The latter criterion is adapted to problems where monetary compensations can be used to facilitate the fair division of the common resource. Applied to climate change, the solution implies that developing countries should participate in emission reduction efforts, but should be fully compensated for their incremental abatement costs.

Type
Research Article
Information
Environment and Development Economics , Volume 13 , Issue 4 , August 2008 , pp. 441 - 455
Copyright
Copyright © Cambridge University Press 2008

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