Pareto Improving Taxes

J. D. Geanakoplos () and H. M. Polemarchakis
Additional contact information
J. D. Geanakoplos: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/john-geanakoplos
H. M. Polemarchakis: Economics, University of Warwick

No 1576, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

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 cause prices to adjust and markets to reclear at different levels of individual consumption. The argument can be extended to economies with strategic interactions, incomplete asset markets or asymmetric information. This constrained suboptimality of competitive allocations might provide a rationale for economic policy in economies with externalities.

Keywords: Commodity taxes; Constrained suboptimality (search for similar items in EconPapers)
JEL-codes: D50 D60 D62 D82 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2006-08
Note: CFP 1235.
References: View references in EconPapers View complete reference list from CitEc
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Published in Journal of Mathematical Economics (2008), 44: 682-696

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Related works:
Journal Article: Pareto improving taxes (2008)
Working Paper: Pareto Improving Taxes (2008)
Working Paper: Pareto Improving Taxes (2006)
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