Distribution-Neutral Welfare Ranking-Extending Pareto Principle

14 Pages Posted: 18 Apr 2017

See all articles by Sugata Marjit

Sugata Marjit

Centre for Studies in Social Sciences, Calcutta; Indian Institute of Foreign Trade; City University of Hong Kong (CityU) - Department of Economics & Finance

Sandip Sarkar

NIT Raipur

Date Written: March 16, 2017

Abstract

The well known Pareto criterion used in the context of efficiency and welfare has to do with absolute changes whereas in every domain of economic behaviour inequality or relative changes has become a major concern. We propose an inequality-preserving or distribution neutral Pareto criterion-the strong Pareto superior or SPS allocation which preserves the initial distribution and makes everyone better off. Our main result is that whenever there is a gain in the aggregate value of the relevant attribute, there exists a unique counterfactual allocation which is SPS.

Keywords: Pareto superiority, strong Pareto superiority, inequality

JEL Classification: A100

Suggested Citation

Marjit, Sugata and Marjit, Sugata and Sarkar, Sandip, Distribution-Neutral Welfare Ranking-Extending Pareto Principle (March 16, 2017). CESifo Working Paper Series No. 6397, Available at SSRN: https://ssrn.com/abstract=2954501 or http://dx.doi.org/10.2139/ssrn.2954501

Sugata Marjit (Contact Author)

Centre for Studies in Social Sciences, Calcutta ( email )

R 1, B.P. Township
Kolkata, West Bengal, India
Kolkata, West Bengal 700094
India

Indian Institute of Foreign Trade ( email )

New Delhi
QUTUB INSTITUTIONAL AREA
NEW DELHI, 110016
India

City University of Hong Kong (CityU) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Sandip Sarkar

NIT Raipur ( email )

Raipur 492010
Chhattisgarh
India

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