William Baumol's Fairness Assumption

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Definitions

For convenience, the below definitions assume a world with two individuals, A and B, and two goods, X and Y

• Envy:

If A prefers to his own bundle, the bundle of goods held by B, A is said to envy B.

• Fairness:

The distribution of goods X and Y is fair if no envy is involved.

• Superfairness:

• Strict Superfairness:

If A strictly prefers his bundle to the bundle received by B (and vice versa), then the distribution of goods X and Y is said to be strictly superfair. That is, if

If the bundle received by each individual is strictly preferred by that individual to the bundles received by