Intergenerational Equity as Market Failure

Abstract

Intergenerational equity is the most basic expression of the rationale for concern by one generation for the impacts of its behaviour on succeeding generations. It is not new to the world but the impact domains of interest are. This is because the scale of some impacts are now such that the closedness of the system composed of Earth and its Sun have become clear. A natural question that arises is whether the novelty surrounding the concern implies a need for changes to behaviour and, if so, what changes to whose behaviour? Market failure is a characteristic that free markets can be identified to possess and which may warrant some form of government intervention. The possibility that intergenerational equity may intrinsically suffer market failure may imply a systemic need for government intervention in resource allocation. There are two main issues: is there systemic market failure; and, if so, what human responses are appropriate? This review goes to the first of these.