Consumption rigths: a market mechanism to redistribute wealth
AbstractIn an exchange economy with only private consumption goods we propose acompetitive mechanism to reach any income distribution. We introduce the socalled consumption rights, which is a real parameter that modifies thebudgetaryconstraint of individuals but does not participate in the utility functions.Consumption rights can be traded in the market, which is the main diferencewith slack parameters, as fiat money or tax inflation, widely known asmethods tomodify the distribution of wealth. The policy maker control variables areboththe amount of rights assigned to each individual and a pricing rule thatdefines the rate of exchange between rights and wealth. The onlyintervention of the planner will be trough the definition of the policy,because the redistribution of wealth will be the consequence of thecompetitive exchange among consumers.
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Bibliographic InfoPaper provided by University of Chile, Department of Economics in its series Working Papers with number wp215.
Date of creation: Nov 2005
Date of revision:
income redistribution; competitive equilibrium; consumption rights.;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
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