Ameliorating congestion by income redistribution
Consider a community with individuals who consume a private good and use a congestible facility. Without a congestion fee, use of the congestible facility will exceed the socially optimal level. We show that under some conditions this externality problem can be solved by income redistribution. Indeed, the poor can gain from a redistribution to the rich.
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- Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
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- Hochman, Harold M & Rodgers, James D, 1969. "Pareto Optimal Redistribution," American Economic Review, American Economic Association, vol. 59(4), pages 542-557, Part I Se.
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