UC Santa Barbara
Independence of Allocative Efficiency from Distribution in the Theory of Public Goods
- Author(s): Bergstrom, Ted
- Cornes, Richard
- et al.
When is the Pareto optimal amount of public goods independent of income distribution? Subject to some regularity conditions, the answer is when preferences of every individual i can be represented by a utility function of the form U(X_i,Y)=A(Y)X_i+B_i(Y) where X_i is i's consumption of private goods and Y is the amount of public goods.