Advanced Search
MyIDEAS: Login to save this article or follow this journal

Pareto improving taxes

Contents:

Author Info

  • Geanakoplos, John
  • Polemarchakis, H.M.
Registered author(s):

    Abstract

    We show that in almost every economy with separable externalities, every competitive equilibrium can be Pareto improved by a package of anonymous commodity taxes that causes prices to adjust and markets to reclear at different levels of individual consumption. This constrained suboptimality of competitive allocations might provide a rationale for economic policy in economies with externalities. It shows that policy makers should look for good tax packages that help everybody, rather than thinking taxes must inevitably be bad for some lobby that will oppose them.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/B6VBY-4R5F1WM-B/1/2d8e0ec6a34274cead97a75f170a6cad
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Mathematical Economics.

    Volume (Year): 44 (2008)
    Issue (Month): 7-8 (July)
    Pages: 682-696

    as in new window
    Handle: RePEc:eee:mateco:v:44:y:2008:i:7-8:p:682-696

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/jmateco

    Related research

    Keywords:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Kubler, F. & Chiappori, P. -A. & Ekeland, I. & Polemarchakis, H. M., 2002. "The Identification of Preferences from Equilibrium Prices under Uncertainty," Journal of Economic Theory, Elsevier, Elsevier, vol. 102(2), pages 403-420, February.
    2. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production II: Tax Rules," American Economic Review, American Economic Association, American Economic Association, vol. 61(3), pages 261-78, June.
    3. Kenneth Arrow, 1970. "Political and Economic Evaluation of Social Effects and Externalities," NBER Chapters, National Bureau of Economic Research, Inc, in: The Analysis of Public Output, pages 1-30 National Bureau of Economic Research, Inc.
    4. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 84(3), pages 488-500, August.
    5. Hurwicz, Leonid, 1979. "On allocations attainable through Nash equilibria," Journal of Economic Theory, Elsevier, Elsevier, vol. 21(1), pages 140-165, August.
    6. Debreu, Gerard, 1976. "Smooth Preferences: A Corrigendum," Econometrica, Econometric Society, Econometric Society, vol. 44(4), pages 831-32, July.
    7. CITANNA, Alessandro & POLEMARCHAKIS, Heracles M. & TIRELLI, M., 2000. "The Taxation of Trades in assets," Les Cahiers de Recherche, HEC Paris 721, HEC Paris.
    8. Debreu, Gerard, 1972. "Smooth Preferences," Econometrica, Econometric Society, Econometric Society, vol. 40(4), pages 603-15, July.
    9. Peter A. Diamond, 1973. "Consumption Externalities and Imperfect Corrective Pricing," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 4(2), pages 526-538, Autumn.
    10. Guesnerie, Roger, 1977. "On the direction of tax reform," Journal of Public Economics, Elsevier, Elsevier, vol. 7(2), pages 179-202, April.
    11. P. A. Diamond, 1975. "A Many-Person Ramsey Tax Rule," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 146, Massachusetts Institute of Technology (MIT), Department of Economics.
    12. Geanakoplos, J. D. & Polemarchakis, H. M., 1990. "Observability and optimality," Journal of Mathematical Economics, Elsevier, Elsevier, vol. 19(1-2), pages 153-165.
    13. DEBREU, Gérard, . "Economies with a finite set of equilibria," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -67, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    14. Alberto Bisin & John Geanakoplos & Piero Gottardi & Enrico Minelli & Heracles Polemarchakis, 2009. "Markets and Contracts," Working Papers, University of Brescia, Department of Economics 0915, University of Brescia, Department of Economics.
    15. Atsushi Kajii & Antonio Villanacci & Alessandro Citanna, 1998. "Constrained suboptimality in incomplete markets: a general approach and two applications," Economic Theory, Springer, Springer, vol. 11(3), pages 495-521.
    16. Hurwicz, Leonid, 1973. "The Design of Mechanisms for Resource Allocation," American Economic Review, American Economic Association, American Economic Association, vol. 63(2), pages 1-30, May.
    17. Stiglitz, Joseph E, 1982. "The Inefficiency of the Stock Market Equilibrium," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(2), pages 241-61, April.
    18. Greenwald, Bruce C & Stiglitz, Joseph E, 1986. "Externalities in Economies with Imperfect Information and Incomplete Markets," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 101(2), pages 229-64, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Gaël Giraud & Cécile Renouard, 2011. "In search of an alternative to shareholder value maximization," Post-Print, HAL hal-00609153, HAL.
    2. Weerachart T. Kilenthong & Robert M. Townsend, 2014. "A Market Based Solution to Price Externalities: A Generalized Framework," NBER Working Papers 20275, National Bureau of Economic Research, Inc.
    3. Gaël Giraud & Cécile Renouard, 2011. "In search of an alternative to shareholder value maximization," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 11038, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    4. Sen, Debapriya & Stamatopoulos, Giorgos, 2013. "Decreasing returns, patent licensing and price-reducing taxes," MPRA Paper 46246, University Library of Munich, Germany.
    5. Jean-Marc Bonnisseau & Elena L. Del Mercato, 2008. "Externalities, consumption constraints and regular economies," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne b08011, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Apr 2009.
    6. Bisin, A. & Geanakoplos, J.D. & Gottardi, P. & Minelli, E. & Polemarchakis, H., 2011. "Markets and contracts," Journal of Mathematical Economics, Elsevier, Elsevier, vol. 47(3), pages 279-288.
    7. Guo, Xiaolei & Yang, Hai, 2010. "Pareto-improving congestion pricing and revenue refunding with multiple user classes," Transportation Research Part B: Methodological, Elsevier, Elsevier, vol. 44(8-9), pages 972-982, September.
    8. repec:hal:journl:halshs-00611712 is not listed on IDEAS
    9. Gaël Giraud & Cécile Renouard, 2011. "In search of an alternative to shareholder value maximization," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers), HAL halshs-00611712, HAL.
    10. repec:hal:journl:halshs-00257731 is not listed on IDEAS

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:mateco:v:44:y:2008:i:7-8:p:682-696. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.