Redistribution, production inefficiency and decentralized efficiency
AbstractThis paper analyzes the role of production distortion in income redistribution in an international trade model. In particular, it examines the role of the Stolper and Samuelson effect on efficient income redistribution. It first shows that production inefficiency can be part of a Pareto-efficient tax system for a small country when there is an asymmetric information problem between the government and individuals. Second, the paper shows that such production inefficiency is not only Pareto-improving for a small country, but is also essential in achieving worldwide tax-constrained Pareto-efficient allocation. These two results suggest important implications for commercial policies. Copyright Springer Science + Business Media, LLC 2006
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 13 (2006)
Issue (Month): 5 (September)
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Web page: http://www.springerlink.com/link.asp?id=102915
Non-linear income taxation; Production efficiency; Decentralized efficiency; International trade; Redistribution;
Other versions of this item:
- Hisahiro Naito, 2003. "Redistribution, Production Inefficiency and Decentralized Efficiency," ISER Discussion Paper 0594, Institute of Social and Economic Research, Osaka University.
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