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The Compensation Principle and the National Income Test

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Author Info
Aldo Montesano (Bocconi University)
Abstract

According to a common opinion in economic literature, the National Income Test provides a necessary condition for potential Pareto dominance. This paper demonstrates that this statement is true in pure-exchange economies, but, in general, false in production economies.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Advances in Theoretical Economics.

Volume (Year): 7 (2007)
Issue (Month): 1 ()
Pages: 1427-1427
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Handle: RePEc:bep:theadv:v:7:y:2007:i:1:p:1427-1427

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Related research
Keywords: compensation principle national income test potential welfare potential pareto dominance

Find related papers by JEL classification:
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

References listed on IDEAS
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  1. Chipman, John S & Moore, James C, 1976. "Why an Increase in GNP Need Not Imply an Improvement in Potential Welfare," Kyklos, Blackwell Publishing, vol. 29(3), pages 391-418.
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This page was last updated on 2008-7-1.

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