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Should income inequality be praised? Multiple public goods provision, income distribution, and social welfare

HANDLE Open Access

Abstract

We investigate how income inequality affects social welfare in a model of voluntary contributions to multiple pure public goods. Itaya, de Meza, and Myles (1997) show that the maximization of social welfare precludes income equality in a single pure public good model. In contrast, we show that the result of Itaya et al. may not be valid in a case of multiple voluntarily supplied public goods; specifically, we show that not only an income inequality-raising redistribution policy but also an income-equalizing one may raise social welfare. We also show that if altruistically motivated voluntary transfers are allowed, an inequality-raising redistribution policy is no longer effective and leaves social welfare unchanged.

Journal

  • Discussion Paper, Series A

    Discussion Paper, Series A 298 1-37, 2016-01-26

    Graduate School of Economics and Business Administration, Hokkaido University

Details

  • CRID
    1050282813996096384
  • NII Article ID
    120005693921
  • HANDLE
    2115/60614
  • Text Lang
    en
  • Article Type
    departmental bulletin paper
  • Data Source
    • IRDB
    • CiNii Articles

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