The problem of distributing exhaustible natural resources between consumption goods and environmental amenities through a voting process is analyzed. Assuming that individuals are endowed with an equal share of private goods, the method of majority decision does not always achieve a Pareto-optimal distribution. However, by means of side payments, the intensity of preferences is revealed. The voting procedure then leads to a Pareto-optimal solution which is more prone to environmental amenities than the simple method of majority decision.
ASJC Scopus subject areas
- Economics and Econometrics
- Management, Monitoring, Policy and Law