A Note on the Efficiency of Income Redistribution with Simple and Combined Policies

David S. Bullock and Klaus Salhofer

Agricultural and Resource Economics Review, 1998, vol. 27, issue 2, 266-269

Abstract: Recent studies have investigated the efficiencies of policies that use several policy instruments simultaneously (for example, a policy that uses a production subsidy combined with a production quota). Several studies of very specific cases find that optimal combination of two policy instruments is more efficient than optimal independent use of either. In this note we demonstrate using set theory and maximization theory, that all such specific results are examples of a more general result, which is that by combining m instruments efficiently, a government can always be at least as efficient as when using a subset of those m instruments. This result holds for any of the several definitions of “efficiency” in the literature.

Date: 1998
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