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| Jean Mercier ythier |
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| ''Regular distributive efficiency and the distributive liberal social contract'' |
| ( 2010, Vol. 12 No.5 ) |
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| We consider abstract social systems of private property,
made of n individuals endowed with nonpaternalistic interdependent
preferences, who interact through exchanges
on competitive markets and Pareto-improving lump-sum
transfers. The transfers follow from a distributive liberal social
contract defined as a redistribution of initial endowments
such that the resulting market equilibrium allocation
is both: (i) a distributive optimum (i.e., is Pareto-efficient
relative to individual interdependent preferences) and
(ii) unanimously weakly preferred to the initialmarket equilibrium.
We elicit minimal conditions for meaningful social
contract redistribution in this setup, namely, the weighted
sums of individual interdependent utility functions, built
from arbitrary positive weights, have suitable properties of
nonsatiation and inequality aversion; individuals have diverging
views on redistribution, in some suitable sense, at
(inclusive) distributive optima; and the initial market equilibrium
is not a distributive optimum.We show that the relative
interior of the set of social contract allocations is then a
simply connected smooth manifold of dimension n − 1. We
also show that the distributive liberal social contract rules
out transfer paradoxes in Arrow–Debreu social systems. We show, finally, that the liberal social contract yields a norm of
collective action for the optimal provision of any pure public
good. |
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| Keywords: Regular distributive efficiency and the distributive liberal social contract
Walrasian equilibrium; Pareto-efficiency; liberal social contract; individual social
preferences; allocation; distribution |
JEL: Y9 - Miscellaneous Categories: Other
Z0 - Other Special Topics: General |
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| Manuscript Received : Nov 02 2010 | | Manuscript Accepted : Mar 07 2012 |
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