Intragenerational externalities and intergenerational transfers

Kolmar, Martin; Meier, Volker (2012): Intragenerational externalities and intergenerational transfers. In: Journal of Pension Economics and Finance, Vol. 11, No. 4: pp. 531-548

Abstract

In an environment with asymmetric information and intragenerational externalities, the implementation of a first-best efficient Clarke-Groves- Vickrey mechanism may not be feasible if it has to be self-financing. By using intergenerational transfers, the arising budget deficit can be covered in every generation only if the initial allocation is not dynamically efficient. While introducing a pay-as-you-go scheme without addressing the externality already yields a Pareto improvement, further welfare gains can be captured by using the additional resources to achieve a perfect internalization.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > Chair for Public Economics
• Subjects: 300 Social sciences > 330 Economics
• Language: English