EXISTENCE OF FAIR ALLOCATIONS IN ECONOMIES WITH PRODUCTION

This paper deals with the problem of compatibility between Pareto-optimality and equal-liberty (alias envy-freeness) in economies with production, seemingly closed after Pazner and Schmeidler's counter-examples. A simple Spence-Mirrlees-like condition (demanding that the less productive jobs are also marginally the harder in terms of well-being) is proposed, under which it is proved that allocations satisfying Pareto-optimality and equal-liberty always exist. This allows us to define a well-alive class of economies where the idea of 'maximal equal-liberty does not lead to a paradox.