IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/69081.html
   My bibliography  Save this paper

A comment on ``Pareto improving taxes''

Author

Listed:
  • Leventides, John
  • Michelacakis, Nickolas

Abstract

In an article appeared in the Journal of Mathematical Economics, J. Geanakoplos and H. Polemarchakis, [Geanakoplos J. and Polemarchakis H.M.: "Pareto improving taxes", Journal of Mathematical Economics 44 (2008), 682-696], prove on page 685 the following theorem: "Theorem. For almost all economies with separable externalities and L>I, every competitive equilibrium is constrained Pareto suboptimal, that is, for each competitive equilibrium, there exists an anonymous tax package t and a competitive t-equilibrium allocation which Pareto dominates it." It is the purpose of this comment to show that restrictions must be applied on the limiting cases for the theorem to hold. Proposition 1.3, below, gives a counter-positive result and the ensuing Corollary shows that the Theorem in [Geanakoplos & Polemarchakis 2008][p. 685] does not hold for I=2 and subsequently the example given in Section 6, page 693, of Geanakoplos & Polemarchakis (2008)} appears to be incorrect.

Suggested Citation

  • Leventides, John & Michelacakis, Nickolas, 2016. "A comment on ``Pareto improving taxes''," MPRA Paper 69081, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69081
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/69081/1/MPRA_paper_69081.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Externalities; Commodity taxes; Constrained suboptimality;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D6 - Microeconomics - - Welfare Economics
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:69081. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.