Pricing Economic Inequality

Somdeb Lahiri

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: In this paper we propose a mechanism which decentralizes the creation of economic inequality. A personalized price for the public good/bad (i.e. economic inequality), determines the choice of disposable income by an individual. A perfect foresight equilibrium is defined, and a vector of prices which supports a utilitarian optimal solution is obtained. A by product of our analysis, is an income tax profile for the individuals which is compatible with decentralized distributive justice.

Date: 1992-08-01
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Persistent link: https://EconPapers.repec.org/RePEc:iim:iimawp:wp01126

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