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Vol. 53, No. 3, pp. 193-203 (2002)

“On the Welfare Economics of Intergenerational Equity”
Kotaro Suzumura (The Institute of Economic Research, Hitotsubashi University)

The issue of intergenerational equity underlies many problems in welfare economics, yet the concept remains relatively underanalysed. The task of this paper is to provide a brief overview and evaluation of the current state of the art in this branch of normative economics. To begin with, the two Cambridge traditions on intergenerational equity, one in Cambridge, UK and another in Cambridge, Massachusetts, are identified and critically examined. We then identify crucial features of the problem of long-run environmental externalities such as global warming, which defy the mechanical application of traditional approaches in welfare economics to this class of problems, and examine the required informational basis of the welfare economics of intergenerational equity. The newly evolving paradigm of responsibility and compensation is also examined in this arena.