For a social welfare function W = W(U1(M1); ... ; UH (MH )), where Mh is income the ‘‘social marginal utility of income’’ is defined by for all h, show that the social marginal utility of income is decreasing in Mh for a utilitarian social welfare function. Use this to argue that a fixed stock of income will be distributed equally. Show that the argument extends to any anonymous and concave social welfare function when all consumers have the same utility function.

For a social welfare function W = W(U1(M1); ... ; UH (MH )), where Mh is income the ‘‘social marginal utility of income’’ is defined by for all h, show that the social marginal utility of income is decreasing in Mh for a utilitarian social welfare function. Use this to argue that a fixed stock of income will be distributed equally. Show that the argument extends to any anonymous and concave social welfare function when all consumers have the same utility function.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter33: Income, Income Distribution, And Poverty

Section: Chapter Questions

Problem 10E

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