Geanakoplos, John and Polemarchakis, H. M.. (2008) Pareto improving taxes. Journal of Mathematical Economics, Vol.44 (No.7-8). pp. 682-696. ISSN 0304-4068

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Abstract

We show that in almost every economy with separable externalities, every competitive equilibrium can be Pareto improved by a package of anonymous commodity taxes that causes prices to adjust and markets to reclear at different levels of individual consumption. This constrained suboptimality of competitive allocations might provide a rationale for economic policy in economies with externalities. It shows that policy makers should look for good tax packages that help everybody, rather than thinking taxes must inevitably be bad for some lobby that will oppose them. (C) 2007 Published by Elsevier B.V.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions Q Science > QA Mathematics H Social Sciences
Divisions:	Faculty of Social Sciences > Economics
Journal or Publication Title:	Journal of Mathematical Economics
Publisher:	Elsevier
ISSN:	0304-4068
Date:	July 2008
Volume:	Vol.44
Number:	No.7-8
Number of Pages:	15
Page Range:	pp. 682-696
Identification Number:	10.1016/j.jmateco.2007.07.007
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
URI:	http://wrap.warwick.ac.uk/id/eprint/29943

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