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Institut für Volkswirtschaftslehre, Leuphana Universität Lüneburg >
Working Paper Series in Economics, Leuphana Universität Lüneburg >
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http://hdl.handle.net/10419/57153
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| Title: | | Irreversibility, ignorance, and the intergenerational equity-efficiency trade-off  |
| Authors: | | Hoberg, Nikolai Baumgärtner, Stefan |
| Issue Date: | | 2011 |
| Series/Report no.: | | University of Lüneburg Working Paper Series in Economics 198 |
| Abstract: | | We demonstrate the existence of an intergenerational equity-efficiency tradeoff in policy-making that aims at Pareto-efficiency across generations and sustainability, i.e. non-decreasing utility over time. Our model includes two salient characteristics of sustainability problems and policy: (i) temporal irreversibility, i.e. the inability to revise one's past actions; (ii) closed ignorance, i.e. future consequences of present actions in human-environment systems may be 'unknown unknowns'. If initially unforeseen sustainability problems become apparent and policy is enacted after irreversible actions were taken, policy-making faces a fundamental trade-off between intergenerational Pareto-efficiency and sustainability. |
| Subjects: | | climate change closed ignorance intergenerational equity-efficiency tradeoff irreversibility Pareto-efficiency sustainability |
| JEL: | | D3 H23 Q01 Q38 Q56 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Working Paper Series in Economics, Leuphana Universität Lüneburg
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