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Subsidized But Compulsory Consumption Goods: Some Special Welfare Cases

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  • E. G. West

Abstract

Normally price subsidies paid for by Group B are the most efficient method available to encourage further consumption of a good by Group A so as to appropriate the external benefits from such consumption. If, however, beyond a point Group A suffers negative utility from marginal consumption, Group B may be able to overcome this obstacle by offering an additional income subsidy. In so far as it is necessary for B to police this extra consumption, compulsion is required; but it is of a kind which does not result in net injury to A since full compensation is being paid; the Paretian criteria are therefore met. Compulsion may also be reconcilable with the traditional welfare requirements by a ‘constitutional approach’. Paretian optimality could be secured through unanimous agreement to abide by freely chosen democratic rules concerning the duties of future parents. In the real world it is difficult to decide upon the degree of realistic applicability of the above rationale since the institution of compulsion is also constant with the operation of an imperfect political process in which supply interest groups are dominant. Entstehen externe Nutzen beim Konsum eines Gutes durch Gruppe A, so ist für Gruppe B normalerweise die Zahlung von Preis‐Subventionen die effizienteste Methode, sich diese externen Nutzen zu verschaffen. Wenn allerdings des Grenznutzens des Konsums für Gruppe A negativ wird, kann Gruppe B dieses Hindernis für die Ausweitung des Konsums durch Zahlung von zusätzlichen Einkommens Transfers überwinden. Zwar ist eine solche Ausweitung nur unter rechtlichem Zwang möglich; doch resultiert dieser nicht in einer Netto‐Wohlstandminderung für Gruppe A, da durch den Einkommenstransfer von B nach A voile Kompensation geleistet and das Pareto‐Kriterium erfüllt wird. Zwang kann auch mittels «konstitutionellen Vorkehrungen» mit den traditionellen Welfare‐Bedingungen in Übereinstimmung gebracht werden. Das Pareto‐Optimum kann auch durch einstimmige demokratische Übereinkunft, die in der Verfassung die Pflichten des einzelnen festlegt, gesichert werden. In der Realität, in der der politische Entscheidungsprozess nicht perfekt funktioniert and Produzenteninteressen dominieren, ist es schwer zu erkennen, in welchem Masse die beiden Formen – konstitutioneller and nicht‐konstitutioneller, kompensierter Zwang – angewendet werden. Dans le cas où apparaissent des utilités externes à l'occasion de la consommation d'un bien au sein du groupe A, la méthode la plus efficiente, pour le groupe B, de se procurer ces mêmes utilités externes, consiste à payer des subventions en ce qui concerne les prix. Si toutefois l'utilité marginale de la consommation vient àêtre négative pour le groupe A, le groupe B pourra surmonter l'inconvénient de l'élargissement de la consommation grâce au paiement de transferts supplémentaires relatifs aux revenus. En effet, un tel élargissement n'est possible que sous la contrainte légale; aussi, celui‐ci ne résulte pas d'une diminution nette du bienêtre pour le groupe A, car le transfert de revenus de B è A réalise une totale compensation et donc le critère de Pareto est satisfait. La contrainte peut également être accordée aux conditions traditionnelles du bien‐être par l'intermédiaire de mesures constitutionnelles. De même, l'optimum de Pareto peut être assuré par un contrat démocratique unanime qui, dans ses dispositions, fixze les devoirs des particuliers. Dans la réalité, lè où le processus des décisions politiques ne fonctionne pas parfaitement et là où dominent les intérêts des producteurs, it est difficile de reconnaitre, dans quelle mesure, les deux formes – contrainte constitutionnelle et contrainte non‐constitutionnelle, contrainte compensée – peuvent être appliquées.

Suggested Citation

  • E. G. West, 1971. "Subsidized But Compulsory Consumption Goods: Some Special Welfare Cases," Kyklos, Wiley Blackwell, vol. 24(3), pages 534-545, August.
  • Handle: RePEc:bla:kyklos:v:24:y:1971:i:3:p:534-545
    DOI: 10.1111/j.1467-6435.1971.tb00618.x
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    Cited by:

    1. Bruno S. Frey, 1975. "A Roundtable on Foreign Aid Weapon Exports and Aid to Developing Countries," Conflict Management and Peace Science, Peace Science Society (International), vol. 1(2), pages 117-126, February.

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