Tax implementability of fair allocations
AbstractThis paper examines the tax implementability of allocations based on fairness as no-envy (or envy-freeness) and its alternatives, by a tax schedule that depends on labor supply and gross income ((y,l)-implementability). A relevant incentive constraint is perishability of abilities, where agents can exert a lower ability level than they actually possess. We first show that in any economy, every envy-free allocation is (y,l)-implementable. On the other hand, whereas we already know that no-envy may be incompatible with first-best Pareto efficiency, the alternative equity concepts which circumvent this first-best equity-efficiency trade-off meet the obstacle of tax implementability even when labor supply is observable. We also clarify necessary and sufficient domain restrictions under which the egalitarian equivalent allocations satisfy the (y,l)-implementability condition. Copyright Springer-Verlag Berlin/Heidelberg 2004
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Bibliographic InfoArticle provided by Springer in its journal Review of Economic Design.
Volume (Year): 9 (2004)
Issue (Month): 1 (December)
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- LONG, Ngo van & STÄHLER, Frank, 2010.
"Should the Good and the Selfish be Taxed Differently?,"
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07-2010, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Ngo Van Long & Frank Stähler, 2012. "Should the Good and the Selfish be Taxed Differently?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(3), pages 932-948, 09.
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