Fair Division with General Equilibrium Effects and International Climate PoliticsZEW Discussion Paper
This paper introduces a solution for the fair division of common property resources in production economies with multiple inputs and outputs. It is derived from complementing the Walrasian solution by welfare bounds, whose ethical justiﬁcation rests on commonality of ownership. We then apply this solution to the question of burden sharing in the climate change regime, using an intertemporal computable general equilibrium model. For a wide range of initial allocations of CO2 emission rights, we ﬁnd that developing countries should participate in emission reduction eﬀorts in order to increase their global effciency, but should also be fully compensated for their incremental abatement costs.
Böhringer, Christoph and Carsten Helm (2001), Fair Division with General Equilibrium Effects and International Climate Politics, ZEW Discussion Paper No. 01-67, Mannheim.