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Relative advantage, queue jumping, and welfare maximizing wealth distribution

Author

Listed:
  • Alex Coram

    () (Robert Gordon University, Scotland, and The University of Western Australia)

  • Lyle Noakes

    (The University of Western Australia)

Abstract

Suppose individuals get utilities from the total amount of wealth they hold and from their wealth relative to those immediately below them. This paper studies the distribution of wealth that maximizes an additive welfare function made up of these utilities. It interprets wealth distribution in a control theory framework to show that the welfare maximizing distribution may have unexpected properties. In some circumstances it requires that inequality be maximized at the poorest and richest ends of the distribution. In other circumstances it requires that all wealth be given to a single individual. JEL Categories: C61, D60

Suggested Citation

  • Alex Coram & Lyle Noakes, 2006. "Relative advantage, queue jumping, and welfare maximizing wealth distribution," UMASS Amherst Economics Working Papers 2006-08, University of Massachusetts Amherst, Department of Economics.
  • Handle: RePEc:ums:papers:2006-08
    as

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    File URL: http://www.umass.edu/economics/publications/2006-08.pdf
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    References listed on IDEAS

    as
    1. Thorvaldur Gylfason, 2002. "Mother Earth: Ally or Adversary?," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 3(1), pages 7-24, January.
    2. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
    3. Bruno S. Frey & Alois Stutzer, 2002. "The Economics of Happiness," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 3(1), pages 25-41, January.
    4. Weiss, Yoram & Fershtman, Chaim, 1998. "Social status and economic performance:: A survey," European Economic Review, Elsevier, vol. 42(3-5), pages 801-820, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    wealth distribution; positional goods; status; inequality; relative advantage.;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D60 - Microeconomics - - Welfare Economics - - - General

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