A fundamental problem in public finance is that of allocating a given budget to financing the provision of public goods (education, transportation, police, etc.). In this paper it is established that when admissible preferences are those representable by continuous and increasing utility...

Assuming an odd number of voters, E. S. Maskin recently provided a characterization of majority rule based on full transitivity. This paper characterizes majority rule with a set of axioms that includes two of Maskin's, dispenses with another, and contains weak versions of his other two axioms....

Individual welfare is most naturally measured in terms of individual utility but this has the well-known disadvantage that utility levels of different consumers cannot be meaningfully compared. This difficulty is traditionally avoided by using various willingness-to-pay measures, such as...

We show that at any equilibrium of almost every single-good incomplete markets economy, it is possible to find an asset which when introduced makes every agent better-off. Diamond (1967) has shown, however, that such economies are constrained suboptimal, so it is of course impossible to find a...

The concept of translation homotheticity is introduced and defined. It is demonstrated that translation homotheticity is necessary and sufficient for: disposable surplus to be independent of the reference utility, Luenberger's compensating and equivalent benefits to be independent of the...

In this paper we re-examine generic constrained suboptimality of equilibrium allocations with incomplete numeraire asset markets. We provide a general framework which is capable of resolving some issues left open by the previous literature, and encompasses many kinds of intervention in partially...

This paper examines two problems associated with the use of potential Pareto criteria in welfare economics. The first problem is the well-known intransitivity of the compensation criteria Á la Kaldor-Hicks-Scitovsky. The second problem is the possible incompatibility between the...

In this paper we develop a differential technique for investigating the welfare effects of financial innovation in incomplete markets. Utilizing this technique, and after parametrizing the standard competitive, pure-exchange economy by both endowments and utility functions, we establish the...

Starr (1973) showed that, if people have different subjective probabilities, ex ante and ex post efficiency conflict. Conversely, under the simple preferences that he considered, the discrepancy between ex ante and ex post efficiency disappears when subjective probabilities are identical. Here I...

A service is produced for a set of agents. The service is binary, each agent either receives service or not, and the total cost of service is a submodular function of the set receiving service. We investigate strategyproof mechanisms that elicit individual willingness to pay, decide who is...