  We propose a notion of fairness for allocation problems in which different
agents may have different reservation utilities, stemming from different
outside options, or property rights. Fairness is usually understood as the
absence of envy, but this can be incompatible with reservation utilities. It is
possible that Alice's envy of Bob's assignment cannot be remedied without
violating Bob's participation constraint. Instead, we seek to rule out {\em
justified envy}, defined as envy for which a remedy would not violate any
agent's participation constraint. We show that fairness, meaning the absence of
justified envy, can be achieved together with efficiency and individual
rationality. We introduce a competitive equilibrium approach with
price-dependent incomes obtaining the desired properties.
