The Optimality of Boiteux-Ramsey Pricing

Egbert Dierker

Econometrica, 1991, vol. 59, issue 1, 99-121

Abstract: Consider an economy with one public enterprise that is subject to a budgetary constraint and charges prices according to the first-order necessary conditions suggested by M. Boiteux (1956) or F. P. Ramsey (1927). The authors state conditions sufficient to ensure that the resulting allocation is second best. The proof builds on arguments used to demonstrate the Pareto efficiency of marginal cost pricing under appropriate assumptions. Copyright 1991 by The Econometric Society.

Date: 1991
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