NON-LINEAR PRICING AND EQUALITY OF OPPORTUNITY

This paper investigates non-linear pricing schedules that are based on Roemer's equality of opportunity (EOp) criterion, and compare them with the maximin and the utilitarian non-linear pricing schedules. The main results suggest that the EOp policy offers a reasonable compromise between the maximin and the utilitarian policies in the sense that: (1) the consumption for each individual is highest under the utilitarian policy and lowest under the maximin policy, and (2) the individuals in the extreme positions rank the EOp policies between the maximin and the utilitarian policy in terms of utility level. Copyright © 2008 The Author. Journal compilation © 2008 Blackwell Publishing Ltd.