American Economic Review Vol. 78 No. 4 1988
Cash versus Kind, Self-Selection, and Efficient Transfers
Abstract
[This paper investigates second-best (transfers in kind) and third-best (subsidies and taxes) Pareto optima in a simple model where government lacks full information about consumer types (who is able, who is infirm). These Pareto optima rely on self-selection. We show that every third-best optimum other than the equal-income Walrasian equilibrium is Pareto-dominated by a second-best optimum and that standard "willingness-to-pay" criteria are inappropriate in this environment.]
- Volume
- 78
- Issue
- 4
- Pages
- 691-700
- Sources
- bibtex:phds-export.bib