Rights on What is Left: An Axiomatic Discussion of Grandfathering

Abstract

Allocating property rights on an open-access resource that has been freely exploited in the past is often problematic. In practice, involved agents typically rely on one of two competing principles to determine future allocation. The first principle, grandfathering, favors the status quo while the other one, historical accountability, is a corrective justice argument. Using a conceptual framework inspired from the axiomatic literature on claims problems, we examine formally the relationship between the two principle. In particular, we show that both principles are actually not as incompatible as international climate negotiations make it sound. We then characterize allocation rules that correspond to extreme versions of the two principles. In particular, we show that sharing the remaining carbon budget in proportion to historical emissions---usually referred to as “the grandfathering rule”---is actually the most regressive sharing rule compatible with the grandfathering principle.

Keywords: distributive justice, tragedy of the commons, claims problems, axiomatic solutions, climate change

JEL Classification: D30, D63, D70, H23, Q2, Q3, Q56