Intragenerational Externalities and Intergenerational Transfers
Journal
Journal of Pension Economics and Finance
ISSN
1474-7472
ISSN-Digital
1475-3022
Type
journal article
Date Issued
2012-10
Author(s)
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.
Language
English
Keywords
Pay-as-you-go
externalities
mechanism design
adverse selection.
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Cambridge University Press
Publisher place
Cambridge UK
Volume
11
Number
4
Start page
531
End page
548
Pages
18
Subject(s)
Division(s)
Eprints ID
223608