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Judging Social Welfare Policy with the Solving of the Bargaining Problem

Author

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  • Joseph E. Mullat

    (idependent researcher, 1979-1980 assoc. Prof. Economic Division Tallinn Technical University; Estonia)

Abstract

Current analysis addresses an apparently critical issue of wealth circulation in the society. In the form of three persons game, we put the welfare-related burden on taxpayers. The Negotiator No.1 stands up for citizens’ legal and moral right to social services. The Negotiator No.2 proceeds from the needs of citizens for the provision of public goods. Quite the opposite, the Player, called No.3, gives the private consumption a preference over social services and public goods, i.e., the citizens-taxpayers try to reduce their tax obligations being accumulated into the general account of negotiators No.1 and No.2. In fact, the voters-citizens fulfil their expectations about taxes by a threat to acknowledge or to reject the bargaining agreement, e.g. a welfare committee must approve a motion against big taxes by unanimous vote. The government assesses and controls the wealth circulation by poverty line parameter. We provide an evidence for claim that 50% median income is an ideal solution.

Suggested Citation

  • Joseph E. Mullat, 2002. "Judging Social Welfare Policy with the Solving of the Bargaining Problem," Game Theory and Information 0207003, University Library of Munich, Germany, revised 18 Apr 2005.
    • Handle: RePEc:wpa:wuwpga:0207003
    Note: Type of Document - Acrobat PDF; prepared on Adobe ver. 4.0; to print on transparent/device-independent; pages-30; tables-1, figures-3. Earlier version of this paper was presented at the Third International Conference on Public Economics, PET02, Paris, July 4th – 6th 2002, http://www.datalaundering.com/download/program.pdf, http://www.datalaundering.com/download/paris.pdf, Research Announcements, Economics Bulletin,Vol. 28 no. 22, 2001, current version has been presented at the Conference of Economic Design, SED04, Mallorca, June 29th – July 2nd 2004, http://www.iae.csic.es/sed2004/doc/Program2306.pdf
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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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