| In this dissertation a criterion of justice called L-nondiscrimination is developed, by extracting the ethical judgement from Lindahl's equilibrium concept, for economies with a public and private goods. It has been shown that under certain conditions, a subset of L-discriminatory allocations is always within the core. Furthermore, it would be possible for those L-nondiscriminatory allocations within the core, to be decentralized through a specific cost sharing method. Thus, we proved the existence of mechanisms implementing L-nondiscriminatory allocations which are robust to coalition manipulability.;For economies with a large number of small traders, we derived an equivalence result for the Lindahl and L-nondiscriminatory allocations. Finally, we examined the problem of burden sharing among NATO countries, when defence is considered to be a pure public good. We showed that larger countries are benefited more than smaller countries from the production of the public good, if the income elasticity of marginal utility of income is greater than one in absolute value. Therefore, we derived empirical estimates of the income elasticity of marginal utility of income using complete demand systems. The empirical estimates found to support the hypothesis that the income elasticity of marginal utility of income is greater than one, thus explaining disproportionate burden sharing in NATO. |
