FAIRNESS IN MARKETS AND GOVERNMENT POLICIES - A WEAK EQUITY CRITERIONFOR ALLOCATION MECHANISMS

An allocation is said to be ''weakly envy-free'' if no individual envi es others with the same or smaller endowments. We show that competitiv e equilibrium allocations are weakly envy-free, i.e., this weak notion of fairness is achieved in markets. Since government policies are exp ected to improve fairness in market economies, we require they satisfy at least this weak equity criterion in any economy. We show that many well-known equity criteria for taxation (e.g., anonymity, incentive-p reservation, horizontal equity, ability-to-pay principle to finance pu re public goods, and benefit principle for impure public goods) are im plied by this weak criterion.