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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.
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    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.

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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 116 (2012)
    Issue (Month): 3 ()
    Pages: 343-345

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    Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:343-345

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    Web page: http://www.elsevier.com/locate/ecolet

    Related research

    Keywords: Public goods; Independence; Efficiency; Income distribution;

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    1. Lau, Lawrence J., 1982. "A note on the fundamental theorem of exact aggregation," Economics Letters, Elsevier, vol. 9(2), pages 119-126.
    2. Muellbauer, John, 1976. "Community Preferences and the Representative Consumer," Econometrica, Econometric Society, vol. 44(5), pages 979-99, September.
    3. Lewbel, Arthur, 1989. "Exact Aggregation and a Representative Consumer," The Quarterly Journal of Economics, MIT Press, vol. 104(3), pages 621-33, August.
    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. 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 1753-65, November.
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