The political economy theorem
MPRA Paper from University Library of Munich, Germany
Welfare maximisation is constrained by the ultimate frontier of efficient allocations, with a unique, interior optimum. By the second welfare theorem, such an optimum depends on a specific wealth distribution out of innumerable ones at given prices, whereby the state cannot refrain from redistributing. Such has long been known by the profession, but it never received a mathematical formalisation, which this article takes up. Building on the literature, this research also presents two simplified proofs to the two welfare theorems and a mathematical formalisation of the resolution to the compromise between equity and efficiency, for the additional constraint binds the social welfare function in equity and it originates the ultimate possibility frontier in efficiency.
Keywords: competitive equilibrium; Pareto efficiency; political economy; social welfare; utility possibility; wealth distribution. (search for similar items in EconPapers)
JEL-codes: D31 D51 D61 D63 I31 I38 P46 P48 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/101037/1/MPRA_paper_101037.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/109750/1/MPRA_paper_109750.pdf revised version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:101037
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().