SFB 303 Discussion Paper No. A - 80

Author: Tillmann, Georg
Title: Equity and Production
Abstract: In this paper we scrutinize the properties of fair allocation in production economies. This will be done in a generalized Mirrlees framework where agents differ from each other in preferences and productivity. As our results concerning fairness are rather negative we introduce another fairness criterion and compare these two. But even if existence employing the second criterion is always assured this criterion is unsatisfactory, too: In economies with many agents only the Laissez-faire state, i.e. the equilibrium without any tax, "survives". To obtain "real equity" optimality must be given up. Again, we have the usual equity-efficiency trade-off, well known from the tax-literature.
Creation-Date: 1986
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