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Why equity cannot be separated from efficiency II: when should social pricing be progressive?

Author

Listed:
  • Ron Baiman

    (Center for Urban Economic Development, University of Illinois, 400 S. Peoria St. Suite 2100, Chicago, IL 60607-7035, USA; Tel.: +1-312-355-2449 rbaiman@uic.edu)

Abstract

This paper corrects and extends Baiman (2001) by deriving valid conditions that determine when equity factors outweigh efficiency factors in the progressive Ramsey pricing, or "Progressive Social Pricing Rule," derived in that paper. When these conditions hold, that rule becomes a rule for "progressive socialpricing in the usual sense" of lower-income consumers getting relatively lower prices. When price elasticities are directly correlated with income, this becomes a "direct-elasticity" pricing rule.

Suggested Citation

  • Ron Baiman, 2002. "Why equity cannot be separated from efficiency II: when should social pricing be progressive?," Review of Radical Political Economics, Union for Radical Political Economics, vol. 34(3), pages 311-317, September.
    • Handle: RePEc:sae:reorpe:v:34:y:2002:i:3:p:311-317
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