6. (a). Show analytically that if costless negotiation is possible, rights are well- specified, and redistribution does not affect marginal values, then : (i) The allocation of resources will be identical, whatever the allocation of legal rights The allocation will be efficient, so there is no problem of externality. Furthermore, if a tax is imposed on such a situation, efficiency will be lost.

6. (a). Show analytically that if costless negotiation is possible, rights are well- specified, and redistribution does not affect marginal values, then : (i) The allocation of resources will be identical, whatever the allocation of legal rights The allocation will be efficient, so there is no problem of externality. Furthermore, if a tax is imposed on such a situation, efficiency will be lost.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.6P

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