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On strong independence of allocative efficiency from distribution in the theory of public goods

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  • Kleinberg, Norman L.
  • Ma, Barry K.
  • Weiss, Jeffrey H.

Abstract

We extend Bergstrom and Cornes (1983) to show that for strong independence of efficient allocations from distribution in a public goods economy, the utility functions of all consumers must identically be of the form: A(Y)Xi, where Y and Xi are respectively the quantities of public good and private good for consumer i, and A(⋅) is some arbitrary function. This implies that for an economy with heterogeneous consumer preferences, it is impossible to ensure that any redistribution of private goods will remain efficient, especially for boundary Pareto optima.

Suggested Citation

  • Kleinberg, Norman L. & Ma, Barry K. & Weiss, Jeffrey H., 2012. "On strong independence of allocative efficiency from distribution in the theory of public goods," Economics Letters, Elsevier, vol. 116(3), pages 343-345.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:343-345
    DOI: 10.1016/j.econlet.2012.04.004
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    References listed on IDEAS

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    1. Bergstrom, Theodore C & Cornes, Richard C, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," Econometrica, Econometric Society, vol. 51(6), pages 1753-1765, November.
    2. Muellbauer, John, 1976. "Community Preferences and the Representative Consumer," Econometrica, Econometric Society, vol. 44(5), pages 979-999, September.
    3. Lau, Lawrence J., 1982. "A note on the fundamental theorem of exact aggregation," Economics Letters, Elsevier, vol. 9(2), pages 119-126.
    4. Stoker, Thomas M, 1984. "Completeness, Distribution Restrictions, and the Form of Aggregate Functions," Econometrica, Econometric Society, vol. 52(4), pages 887-907, July.
    5. Arthur Lewbel, 1989. "Exact Aggregation and a Representative Consumer," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(3), pages 621-633.
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    Cited by:

    1. Kleinberg Norman L. & Ma Barry & Weiss Jeffrey, 2012. "On a Notion of Similarity with Endowments in Public Economics," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 12(1), pages 1-12, July.

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    More about this item

    Keywords

    Public goods; Independence; Efficiency; Income distribution;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D30 - Microeconomics - - Distribution - - - General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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